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Published On : Wed, Oct 10th, 2018

RBI cancels licence of Navodaya Urban Co-operative Bank for irregularities

Nagpur: Taking serious view of large scale financial irregularities, the Reserve Bank of India (RBI) has now cancelled the licence of city-based Navodaya Urban Co-operative Bank Ltd to carry on banking business, with effect from October 08, 2018. The RBI has directed the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra to issue an order for winding up the bank and appoint a liquidator for the bank. Earlier, the apex bank had appointed an administrator on the coop bank owing to the financial irregularities.

The Navodaya Urban Co-operative Bank Ltd was being run by former Congress MLA Ashok Dhawad.

The order to cancel licence of Navodaya Urban Co-operative Bank Ltd was issued by RBI on October 4. The order was received by the bank administrator and District Sub Registrar Ajay Kadu on October 8. The auditor Shrikant Supe had earlier blamed the Navodaya Urban Co-operative Bank Ltd for financial irregularities and recommended filing of criminal cases against all Directors and office-bearers of the bank.

The RBI cancelled the licence of Navodaya Urban Co-operative Bank Ltd as it found the bank does not have adequate capital and earning prospects. As such, it does not comply with the provisions of Section 11(1) and Section 22(3)(d) read with Section 56 of the Banking Regulation Act, 1949. The bank has failed to comply with the requirements of Section 22(3)(a), 22(3)(b), 22(3)(c), 22(3) (d) and 22(3)(e) read with Section 56 of the Banking Regulation Act, 1949. The continuance of the bank is prejudicial to the interests of its depositors and the bank with its present financial position would be unable to pay its present depositors in full. Public interest would be adversely affected if the bank is allowed to carry on its banking business any further, the RBI said in its order.

The apex bank further said with the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of Navodaya Urban Co-operative Bank Ltd as per the DICGC Act, 1961 will be set in motion. On liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of Rs 1 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per usual terms and conditions.

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