In
view of the fact that The Maratha Co-operative Bank Ltd., Hubli, (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 29, 2008. The Registrar
of Co-operative Societies, Karnataka 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).
The Maratha Co-operative Bank Ltd.,
Hubli, Karnataka State was granted a licence on January 8, 1988 by the
Reserve Bank of India to conduct banking business. The inspection of the bank
conducted under Section 35 of the Act, with reference to its financial position
as on March 31, 2003 revealed deterioration in the financial position of the bank.
The gross and net Non Performing Assets of the bank were very high and the bank
was facing liquidity crisis and was not in a position to pay the matured deposits.
The bank was placed under directions under Section 35A of the Act vide orders
dated January 21, 2004 restricting its operations, including placing a ceiling
on withdrawal of deposits of Rs.1,000/- per depositor.
The
subsequent statutory inspection of the bank conducted with reference to its financial
position as on March 31, 2005 revealed that the bank's financial position had
further deteriorated and its deposits were eroded as realisable value of paid
up capital and reserves was negative. A Show Cause Notice for cancellation of
licence was issued to the bank on April 04, 2006.
The
subsequent inspections conducted with respect to financial position as on March
31, 2006 and March 31, 2007 revealed that the bank's position was precarious.
After taking into consideration the reply submitted by
the bank to the show cause notice issued, the findings of the subsequent inspections
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 amount insured as per
the DICGC Act will be set in motion.
Consequent to the cancellation
of its licence, The Maratha Co-operative Bank Ltd., Hubli, (Karnataka) 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 send email to Shri S.Neelakantan, 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)-22291696; Fax Number: (080) 2229
3668/2221 0185
G. Raghuraj
Deputy General Manager
Press
Release : 2007-2008/1008