Reserve Bank of India (RBI)
Reserve Bank of India (RBI)
Photo Credit: PTI

Mumbai: The Reserve Bank of India (RBI) has cancelled the banking licence issued to Subhadra Local Area Bank Ltd Kolhapur, Maharashtra under Section 22 (4) of the Banking Regulation Act, 1949 to carry on banking business in India. The order is made effective from the close of business on December 24, 2020.

The Reserve Bank cancelled the licence of the Subhadra Local Area Bank Ltd as:

i. The affairs of the Subhadra Local Area Bank Ltd. were conducted in a manner detrimental to the interests of its present and future depositors.

ii. Public interest would be adversely affected if it is allowed to continue to do the business in the manner in which it is functioning.

iii. The general character of the management is considered prejudicial to the interest of the present and future depositors.

The bank had breached the minimum net worth requirement for two quarters in the financial year 2019-20.

Consequent to the cancellation of the licence, Subhadra Local Area Bank Ltd. is prohibited from conducting the business of ‘banking’ as defined in Section 5(b) or any additional business envisaged under Section 6 of the Banking Regulation Act, 1949 with immediate effect. Reserve Bank of India will make an application for winding up before the High Court.

Subhadra Local Area Bank Ltd. has enough liquidity to pay all its depositors, said RBI.

RBI's move comes days after it had cancelled the license of Karad Janata Sahakari Bank in Maharashtra to conduct banking business citing that the bank does not have adequate finance.

(To download our E-paper please click here. The publishers permit sharing of the paper's PDF on WhatsApp and other social media platforms.)

Free Press Journal