The Reserve Bank of India delivered the order cancelling the licence
of Siddhpur Commercial Co-operative Bank Ltd., Siddhpur after the close of business
on December 10, 2008. The bank 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 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/her deposits up to a monetary
ceiling of Rs. 1,00,000/- (Rupees one lakh only) from the Deposit Insurance and
Credit Guarantee Corporation (DICGC) under usual terms and conditions.
The bank was granted a licence by Reserve Bank on September 2, 1986 to commence
banking business. The statutory inspection of the bank with reference to its position
as on March 31, 2006 had indicated that its financial position was impaired. Subsequent
inspections i.e. March 31, 2007 and March 31, 2008 also revealed that the bank's
financial position deteriorated further, and it was issued directions under Section
35 A of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies)
from the close of business of August 21, 2008 restricting its operations for period
of six months. The Reserve Bank of India issued a show cause notice to
the bank on August 21, 2008 asking it to show cause as to why the licence granted
to it to conduct banking business should not be cancelled. The reply to the show
cause notice was examined. The bank did not have a viable plan of action
for its revival. In the absence of any viable proposal to turn around and achieve
the required regulatory prescriptions the possibility of revival of the bank was
remote. Therefore, 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 Siddhpur Commercial Co-operative Bank Ltd., Siddhpur, Gujarat
will be set in motion subject to the terms and conditions of the Deposit Insurance
Scheme. Consequent to the cancellation of its licence, the bank 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.N. Modi,
Assistant General Manager, Urban Banks Department, Reserve Bank of India, Ahmedabad.
His contact details are : Postal Address : La Gajjar Chambers, Ashram Road, Ahmedabad–380
009; Tel.No.(079)26589338, Fax No. (079)26584853 or for email click here. Ajit
Prasad
Manager Press Release : 2008-2009/870 |