The Reserve Bank of India (RBI), on Thursday, cancelled the licence of Ahmedabad-based Madhavpura Mercantile Co-operative Bank. In 2000, the bank was in the news following its exposure to scam-tainted stock broker Ketan Parekh.
“In view of the fact that the bank had ceased to be solvent, all efforts to revive it in close consultation with the Union Government had failed and the depositors were being inconvenienced by continued uncertainty, the RBI passed an order cancelling the banking licence issued to the co-operative bank with effect from the close of business on June 4,” the RBI said in a press release here.
The Central Registrar of Co-operative Societies (CRCS), New Delhi, has been requested to issue an order for winding up of the co-operative bank and appoint a liquidator. The co-operative bank was granted a licence by the RBI on August 19, 1994, to commence banking business in India. The government was also advised of the position that there was no other option but to initiate the process of liquidation of the bank. The Central Task Force on Co-operative Urban Banks (TAFCUB), at its meeting held on January 4, also recommended that there were no other options but to initiate steps for liquidation of the bank. In view of the precarious financial position of the co-operative bank, the RBI had issued a notice (SCN), on March 16, 2012, asking it to show cause as to why the licence granted to it to carry on banking business in India should not be cancelled.
The co-operative bank, in its reply dated April 18, 2012 to the SCN, accepted the precarious financial position of the co-operative bank, which was attributed to the fraud amounting to Rs.1,200 crore committed on the co-operative bank by the share broking community, including Ketan Parekh and his associates, in collusion with the then members of the board of directors.
Keywords: Madhavpura Mercantile Co-operative Bank