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In view of the fact that the Karamsad Urban
Co-operative Bank Ltd., Karamsad Gujarat, had ceased to be solvent, all efforts
to revive it in close consultation with the Government of Gujarat had failed
and the depositors were being inconvenienced by continued uncertainty, the Reserve
Bank of India delivered the order cancelling its licence to the bank on December
09, 2006. The Registrar of Co-operative Societies, Gujarat has also been requested
to issue an order for winding up the bank and appoint a liquidator for the bank.
It may be highlighted that on liquidation every depositor is entitled to repayment
of his deposits up to a monetary ceiling of Rs. 1,00,000/- from the Deposit
Insurance and Credit Guarantee Corporation (DICGC) under usual terms and conditions.
The Reserve Bank of India decided to cancel
the licence of the Karamsad Urban Co-operative Bank Ltd., Karamsad, Gujarat
as a final step after examining all the options for revival of the bank and
in order to protect the interest of the depositors.
On account of a liquidity crunch, the
bank was not able to refund the amount of matured FDs. It was, therefore, issued
directions under Section 35A of the Banking Regulation Act, 1949 (As applicable
to Co-operative Societies) vide RBI directive dated February 03, 2003 including
a cap of Rs 2000/- on withdrawal of deposits by an individual depositor. The
inspection of the bank conducted with reference to its position as on March
31, 2006 revealed further deterioration in its financial condition. Its deposits
were getting eroded as realizable value of paid-up capital and reserve was in
the negative.
The Reserve Bank had issued a notice
to the bank on September 28, 2006 asking it to show cause as to why the licence
granted to it to conduct banking business should not be cancelled. As the bank
did not have a viable plan of action for its revival and the chances of its
revival were remote, the Reserve Bank of India took the extreme measure of cancelling
licence of the bank in the interest of the bank's depositors. With the cancellation
of its licence and commencement of liquidation proceedings, the process of paying
the depositors of the Karamsad Urban Co-operative Bank Ltd., Karamsad will be
set in motion subject to the terms and conditions of the Deposit Insurance Scheme.
Consequent to the cancellation of its licence,
Karamsad Urban Co-operative Bank Ltd., Karamsad is prohibited from carrying
on ‘banking business’ as defined in Section 5(b) of the Banking Regulation Act,
1949 (AACS) including acceptance and repayment of deposits.
For any clarifications, depositors may approach
Shri V. G. Venkatachalapathy, Deputy General Manager, Urban Banks Department,
Reserve Bank of India, Ahmedabad. His contact details are as below :
Postal Address: Urban Banks Department,
Reserve Bank of India, La Gajjar Chambers, Ashram Road, P. B. No. 1, Ahmedabad
380 009. Telephone Number: (079) 26584037, Fax Number: (079) 26584853.
B.V.Rathod
Manager
Press Release: 2006-2007/798
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