Press Release*
April 2012
The Kheralu Nagarik Sahakari Bank Ltd.,
Dist. Mehsana (Gujarat) – Penalised
April 2, 2012
The Reserve Bank of India has imposed a monetary
penalty of `5.00 lakh (Rupees five lakh only) on The
Kheralu Nagarik Sahakari Bank Ltd., Dist. Mehsana
(Gujarat), in exercise of powers vested in it under the
provisions of Section 47(A)(1)(b) read with Section 46(4)
of the Banking Regulation Act, 1949 (As applicable to
Co-operative Societies), for violation of Operational
Instructions of the Reserve Bank of India and single/
group borrower exposure norms. These violations were
observed during the course of the bank’s statutory
inspection with reference to its financial position as
on March 31, 2011.
The Reserve Bank of India had issued a show cause
notice to the bank, in response to which the bank
submitted a written reply. After considering the facts
of the case and the bank’s reply as also personal
submissions in the matter, the Reserve Bank of India
came to the conclusion that the violations were
substantiated and warranted imposition of the penalty.
Directions under Section 35A of the
Banking Regulation Act, 1949 (AACS) The Bhuj Mercantile Co-operative Bank Ltd., Ahmedabad, (Gujarat)
April 3, 2012
The Reserve Bank of India has issued in exercise
of powers vested in it under sub-section (1) of Section
35A of Banking Regulation Act, 1949 (AACS) read with
Section 56 of the Banking Regulation Act, 1949, certain
Directions to the Bhuj Mercantile Co-operative Bank
Ltd., Ahmedabad (Gujarat), whereby as from the close
of business as on April 02, 2012, the aforesaid bank
shall not, without prior approval in writing from the
Reserve Bank of India, grant or renew any loans and
advances, make any investment, incur any liability
including borrowal of funds and acceptance of fresh
deposits, disburse or agree to disburse any payment
whether in discharge of its liabilities and obligations
or otherwise, enter into any compromise or arrangement
and sell, transfer or otherwise dispose of any of its
properties or assets except to the extent and in the
manner as notified in the RBI Directions dated April
02, 2012, a copy of which is displayed on the bank’s
premises for perusal by interested members of the
public. However, the bank has been permitted to allow
withdrawal a sum not exceeding `10,000/- of the total
balance in every savings or current account or any other
deposit account, by whatever name it may be called.
The issue of the above Directions by the RBI should
not, per se, be construed as cancellation of banking
licence by RBI. The bank will continue to undertake
banking business with the restrictions till its financial
position improves. These directions shall remain in
force for a period of six months from the close of
business on April 02, 2012 and are subject to review.
Reserve Bank Cancels the Licence of Shri Bhadran Mercantile Co-operative Bank Ltd., Bhadran (Gujarat)
April 9, 2012
In view of the fact that Shri Bhadran Mercantile
Co-operative Bank Ltd, Bhadran (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 on March 30,
2012 delivered its order dated March 21, 2012 to the
bank cancelling its licence to carry out banking
business. The Registrar of Co-operative Societies,
Gujarat State 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 `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
of India on December 11, 1986 to commence banking
business. In view of its precarious financial position
and with a view to preventing preferential payments
and protecting the interest of the depositors, the bank
was placed under Operational Instructions under
Section 36(1) of the Banking Regulation Act, 1949
(AACS) with effect from the close of business on
October 31, 2006 restricting withdrawal of deposits to `1000/- per depositor. The statutory inspection of the
bank carried out under Section 35 of the Act ibid with
reference to its financial position as on March 31, 2010
revealed further deterioration in its financial position
and other violations. Its net worth and CRAR were
assessed at `10.72 lakh and 29.6 per cent respectively.
The gross NPAs formed 81.3 per cent of the gross
advances. The assessed net loss of the bank stood at `263.73 lakh. The statutory inspection conducted by
Reserve Bank of India under Section 35 of the Banking
Regulation Act, 1949 (AACS) with reference to its
financial position as on March 31, 2011 revealed that
the assessed networth was (-) `272.67 lakh, CRAR was
(-) 413.5 per cent, gross NPAs were 78.2 per cent of the
gross advances and the deposit erosion was 55.0
per cent. As the financial position of the bank with
reference to its position as on March 31, 2011 turned
precarious and revealed further deterioration, the bank
was placed under Directions under Section 35A (1) of
the Act ibid for a period of six months from the close
of business on August 26, 2011 which was extended
for a further period of six months from the close of
business on February 26, 2012, subject to review.
A Show Cause Notice for cancellation of licence
under Section 22 of the Banking Regulation Act, 1949
(AACS) was issued on December 22, 2011. The bank in
its reply dated January 16, 2012 admitted the
irregularities/observations and did not furnish any
specific comment on the deficiencies detailed in the
SCN. The bank had not submitted any concrete revival
plan or any proposal for merging itself with any strong
UCB. In the absence of any proposal for merger and in
view of the bank’s precarious financials, chances of its
revival are remote and continuation of the bank will
lead only to further erosion in its deposits and will be
against public interest.
It is therefore, evident from the above that:
-
The bank does not comply with the provisions
of Section 11(1), 22 (3) (a) and 22 (3) (b) of the
Act ibid.
-
The bank is not in a position to pay its present
and future depositors.
-
The affairs of the bank are being conducted in
a manner detrimental to the interest of the
depositors.
-
The financial position of the bank leaves no
scope for its revival.
-
In all likelihood public interest will be affected
if the bank is allowed to carry on its business
any further.
Therefore, Reserve Bank of India took the extreme
measure of cancelling the licence of the bank in the
interest of bank’s depositors. With the cancellation of
licence and commencement of liquidation proceedings,
the process of paying the depositors of the Shri Bhadran
Mercantile Co-operative Bank Ltd, Bhadran (Gujarat),
the amount insured as per the DICGC Act, 1961 will be
set in motion subject to the terms and conditions of
the Deposit Insurance Scheme.
Consequent to the cancellation of its licence, Shri
Bhadran Mercantile Co-operative Bank Ltd, Bhadran
(Gujarat) is prohibited from carrying on business of
‘banking’ as defined in Section 5(b) of the Banking
Regulation Act, 1949 (AACS).
For any clarifications, depositors may approach
Smt. M. K. Subhashree, Assistant General Manager,
Urban Banks Department, Reserve Bank of India,
Ahmedabad. Her contact details are as below:
Postal Address: Urban Banks Department, Reserve
Bank of India, La Gajjar Chambers, Ashram Road,
Ahmedabad -380 009, Telephone Number: (079)
26589338, Fax Number: (079) 26584853.
RBI implements Web-based On-line Bidding for Primary Auctions of G-Secs
April 11, 2012
The Reserve Bank of India has, since February
2012, introduced an additional facility of web-based
NDS auction module to facilitate online bidding by
Constituents Subsidiary General Ledger clients (CSGL
clients)/Gilt account holders (GAHs) in primary auctions
of Government Securities (G-Secs).
Explaining the module, the Reserve Bank stated
that the module permits internet-based direct
participation of GAHs in primary auctions of G-Secs.
However, the access is subject to controls by respective
Primary Member (PM) as PM would continue to be
responsible for settlement of CSGL bids/trades in
respect of its GAHs, as is presently the case.
The web-based auction module is an additional
facility and all regulations related to current CSGL
account holders/PMs and client bidding system would
remain, the Reserve Bank stated and added that all
actions on web-based NDS auction application would
also be governed by the extant Rules, Regulations,
Notifications and/or any other instructions issued by
it from time to time. The Reserve Bank would also have
no role in any dispute between any GAH and its PM for
any action performed on this application by either GAH
or its PM.
Further details and operational guidelines on the
web-based NDS auction facility are available on CCIL
website (www.ccilindia.com). Market participants may
also contact NDS-auction Helpdesk on 022-66639399
or Email in regard
to any further queries on the application.
Reserve Bank of India penalises Shri Vinayak Sahakari Bank Ltd., Ahmedabad
April 11, 2012
The Reserve Bank of India, in exercise of powers
vested in it under the provisions of Section 47 A (1)(b)
read with Section 46(4) of the Banking Regulation Act,
1949 (AACS), imposed a monetary penalty of `5.00 lakh
(Rupees five lakh only) on Shri Vinayak Sahakari Bank
Ltd., Ahmedabad, for violation of RBI instructions/
directions relating to operational instructions,
destruction of records of banking transactions, non
production of books of account before the Inspecting
Officer and non-filing of STRs.
RBI had issued a Show Cause Notice to the bank
in response to which the bank submitted a written
reply and after considering facts of the case, bank’s
reply and personal submissions in the matter, RBI came
to the conclusion that the violations were substantiated
and warranted imposition of penalty.
Bank Rate
April 18, 2012
The Reserve Bank of India has decided to lower
the Bank Rate to 9.0 per cent per annum from 9.5 per
cent per annum with effect from April 17, 2012.
The Udhna Citizen Co-operative Bank
Ltd., Surat, (Gujarat)
April 26, 2012
The Reserve Bank of India had issued a directive,
in the interest of public, to the Udhna Citizen Cooperative
Bank Ltd., Surat (Gujarat), in exercise of the
powers vested under sub-section (1) of Section 35 A of
the Banking Regulation Act, 1949 (AACS), from the close
of business as on November 2, 2010, in terms of which
the aforesaid bank shall not, without prior approval of
RBI in writing grant or renew any loans an advances,
make any investment, incur any liability including
borrowal of funds and acceptance of fresh deposits,
disburse or agree to disburse any payment whether in
discharge of its liabilities and obligations or otherwise,
enter into any compromise or arrangement and sell,
transfer or otherwise dispose of any of its properties
or assets excepts as notified in the RBI Directions dated
October 26, 2010 a copy of which is displayed on the
bank’s premises for perusal by interested members of
the public. In particular, a sum not exceeding `1000/-
(Rupees one thousand only) of the total balance in every
savings bank or current account or any other deposit
account may be allowed to be withdrawn subject to
conditions stated in the above RBI Directions.
The period of directive was last extended upto
May 2, 2012, vide modified directive No..UBD.CO. BSD
II / D- 59 /12.21.354 / 2010-11 dated October 14, 2011.
The period of directive imposed on the bank has
since been further extended up to November 1, 2012,
vide modified directive No. UBD.CO.BSD II /D- 81
/12.21.354 / 2011-12 dated April 20, 2012 in exercise of
the powers vested under sub-section (1) of Section 35
A of Banking Regulation Act, 1949 (AACS), subject to
review.
The detailed modified directive is displayed on
the bank premises for interested members of the public
to peruse.
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