The Hindu Business Line : RBI cancels urban co-op bank licence

The Reserve Bank of India cancelled the licence of The Bharat Mercantile Co-operative Urban Bank, Hyderabad, on October 17, as all efforts to revive the bank had failed.

The RBI also requested the Registrar of Co-operatives Societies (RCS), Andhra Pradesh, to issue an order for winding up of the bank and appoint a liquidator for the bank. The bank is now prohibited from carrying on business.

On liquidation, every depositor is entitled to payment of his deposits up to a ceiling of Rs 1 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC), the RBI release said.

A statutory inspection of the bank conducted by the RBI in 2004 revealed that the bank was not complying with several provisions of the Banking Regulation Act and had also violated several RBI guidelines. There was deterioration in the bank's financial condition and mismanagement by the board of directors.

The bank is now prohibited from carrying on banking business including acceptance and repayment of deposits.

For any clarifications, depositors can contact Mr M. Chandrashekaran, Deputy General Manager, Urban Banks Department, RBI. Tel No: (040) 23234623

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