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Mumbai, Feb 16: As a final step after examining all the options for revival of the bank and in order to protect the interest of the depositors, the Reserve Bank of India (RBI), has decided to cancel the licence of the Dhansura People's Co-operative Bank, Gujarat.
However, on liquidation every depositor is entitled to repayment of his deposits up to Rs 1,00,000/- from the Deposit Insurance and Credit Guarantee Corporation (DICGC). 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 said a Reserve Bank of India (RBI) release. The bank has been prohibited from granting or renewing loans and advances, since June 19, 2004, as it has been facing liquidity crisis. Financial condition as on December 31, 2004 revealed deterioration of the bank's financial condition. Its deposits were getting eroded as realisable value of paid-up capital and reserve was in the negative.
Furthermore, it was prohibited from accepting fresh deposits and was restricted for repaying deposits up to Rs 1,000 per depositor to prevent preferential repayment of deposits by the bank. Thereafter, the RBI issued a show cause notice to the bank on June 25, 2005 as to why the licence granted to it to conduct banking business should not be cancelled. As the bank did not have a viable plan of action for revival and the chances of its revival were remote, the RBI took the extreme measure of canceling the licence in the interest of the bank's depositors it said.
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