RBI cancels licence of Bhadran Cooperative Bank

The Reserve Bank of India (RBI) has cancelled the licence of Gujarat-based Shri Bhadran Mercantile Cooperative Bank, following deterioration in its financial condition and save the interest of depositors.

The decision was taken in view of the fact that 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, RBI said in a statement.

"Consequent to the cancellation of its licence, Shri Bhadran Mercantile Cooperative Bank is prohibited from carrying on business of banking," it said.

It may be highlighted that on liquidation, it said, every depositor is entitled to repayment of his or her deposits up to a monetary ceiling of Rs 1 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC). RBI took the extreme measure of cancelling the licence of the bank in the interest of bank's depositors, it said.

 

RBI had issued banking licence to Shri Bhadran Mercantile Cooperative Bank in 1986. The central bank in its assessment found that the cooperative bank is not in a position to pay its present and future depositors. It also found that the affairs of the bank are being conducted in a manner detrimental to the interest of the depositors and the financial position of the bank leaves no scope for its revival.

The statutory inspection carried out by the RBI found the net loss of the bank as on March 31, 2010 at Rs 2.63 crore and the gross NPAs was 81.3 per cent of the total advances.

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 suspension for a period of six months from the close of business on August 26, 2011, it said.

It was extended for a further period of six months from the close of business on February 26, 2012, subject to review, it added.