In view of the fact that the Harugeri
Urban Co-operative Credit Bank Ltd., Harugeri, (Karnataka) had ceased to be
solvent, all efforts to revive it in close consultation with the Government
of Karnataka had failed and the depositors of the bank were being inconvenienced
by continued uncertainty, the Reserve Bank of India delivered the order canceling
its licence to the bank after the close of business on January 22, 2007. The
Registrar of Co-operative Societies, Karnataka has also been requested to issue
an order for winding up of 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).
The bank was granted a licence
by the Reserve Bank on November 24, 1987 to commence banking business. A special
scrutiny conducted on April 9, 2003 revealed that the bank was facing severe
liquidity problem. In view of the critical liquidity position and other deficiencies
observed during the scrutiny, in order to protect the interest of the depositors,
the bank was placed under directions under Section 35A of the Banking Regulation
Act 1949(AACS) on June 11, 2003 prohibiting it, inter alia, from sanctioning/
renewing of loans and advances, making investments, borrowings and accepting
fresh deposits. The Board of Directors was superseded and an Administrator was
appointed by RCS with effect from August 14, 2003.
The statutory inspection of the
bank carried out under Section 35 of the Act, with reference to its financial
position as on March 31, 2005 revealed that the financial position of the bank
had further deteriorated and was precarious. A notice was issued to the bank
on May 17, 2006 asking it to show cause as to why the licence granted to it
to conduct banking business should not be cancelled.
After taking into consideration
the reply submitted by the bank and after examining all options for its revival,
the Reserve Bank of India took the extreme measure of canceling the 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 Harugeri Urban Co-operative Credit Bank Ltd., the amount
insured as per the DICGC Act will be set in motion.
Consequent to the cancellation
of its licence, the Harugeri Urban Co-operative Credit Bank Ltd. 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 C.R. G. Nair, Deputy General Manager, Urban Banks Department,
Reserve Bank of India, Bangalore. His contact details are as below:
Postal Address: 10/3/8, Nrupathunga
Road, Bangalore 560 001. Telephone Number: (080) 2229 1696; Fax Number: (080)
2229 3668/2221 0185.
Alpana Killawala
Chief General Manager
Press Release: 2006-2007/1048 |