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The Reserve Bank of India (RBI) on Thursday cancelled the banking licence issued to Kolhapur (Maharashtra)-based Subhadra Local Area Bank Ltd.
The central bank, in a statement, said its order in this regard is made effective from close of business on December 24, 2020. It emphasised that the bank has enough liquidity to pay all its depositors.
As per RBI’s statement, it cancelled the licence as the affairs of the Subhadra Local Area bank were conducted in a manner detrimental to the interests of its present and future depositors.
“Public interest would be adversely affected if it is allowed to continue to do the business in the manner in which it is functioning. The general character of the management is considered prejudicial to the interest of the present and future depositors,” the RBI added.
Reserve Bank said it will make an application for winding up the Bank before the High Court.
The central bank observed that the Local Area Bank (LAB) had breached the minimum net worth requirement for two quarters in the financial year 2019-20.
As per Subhadra LAB’s website, it had deposits of ₹14.98 crore and advances of ₹3.71 crore as on March-end 2020.
The bank was incorporated on July 10, 2003 and received a banking licence from RBI to work as a Local Area Bank in the districts of Kolhapur, Satara, Sangli, Belagavi & Pune.
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