The Reserve Bank of India delivered the order cancelling the licence of the Shree Vardhaman Co-operative Bank Ltd., Bhavnagar after the close of business on November 20, 2008.The 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. 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.  It may be highlighted that on liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of Rs. 1,00,000/- (Rupees one lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC) under usual terms and conditions.

The bank was granted a licence by Reserve Bank  on September 29, 1986 to commence banking business.  The statutory inspection of the bank with reference to its position as on March 31, 2006 had indicated that its financial position was impaired.  Subsequently, as the bank's financial position deteriorated further, it was issued directions under Section 35 A of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies) from the close of business of November 20, 2006 restricting its operations.

The statutory inspection of the bank with reference to its position as on March 31, 2007 revealed that its financial position was precarious. The Reserve Bank of India issued a show cause notice to the bank on August 11, 2008 asking it to show cause as to why the licence granted to it to conduct banking business should not be cancelled. The reply to the show cause notice was examined.  The bank did not have a viable plan of action for its revival. In the absence of any viable proposal to turn around and achieve the required regulatory prescriptions the possibility of revival of the bank was remote. Therefore, the Reserve Bank of India took the extreme measure of cancelling licence of the bank in the interest of the bank's depositors. With the cancellation of its licence and commencement of liquidation proceedings, the process of paying the depositors of Shree Vardhaman Co-operative Bank Ltd., Bhavnagar, Gujarat will be set in motion subject to the terms and conditions of the Deposit Insurance Scheme.

Consequent to the cancellation of its licence, Shree Vardhaman Co-operative Bank Ltd., Bhavnagar, Gujarat is prohibited from carrying on ‘banking business’ as defined in Section 5(b) of the Banking Regulation Act, 1949 (AACS) including acceptance and repayment of deposits.

For any clarifications, depositors may approach Shri V L Phadke, Assistant General Manager, Urban Banks Department, Reserve Bank of India, Ahmedabad. His contact details are : Postal Address: Urban Banks Department, Reserve Bank of India, Ahmedabad Regional Office, La Gajjar Chambers, Ashram Road, Ahmedabad–380009 Telephone Number: (079) 26589338,  Fax Number: (079) 26584853 or can be emailed.

Ajit Prasad
Manager

Press Release : 2008-2009/751