RBI cancels Licence of Mahatma Fule Urban Co-operative Bank Ltd., Patoda, Dist. Beed (Maharashtra)


 

 

The Reserve Bank of India has, effective August 24, 2013, cancelled the licence of Mahatma Fule Urban Co-operative Bank Ltd, Patoda, Dist. Beed (Maharashtra) as it had ceased to be solvent and the depositors were being inconvenienced by the continued uncertainty.

The Registrar of Co-operative Societies, Maharashtra State has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.

Upon liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of Rs1,00,000/- (Rupees one lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC) under usual terms and conditions.

Background

The Bank was setup in 1998, and by 2010 its financial position had become shaky. The RBI Audit revealed that it had not maintained statutory liquidity reserves, exceeded single group exposure limit in respect of a bank guarantee amounting to Rsfive crore and sanctioned unsecured advances in excess of prescribed limits.

Later RBI inspections showed that

Overdraft was allowed in a current account related to the former Chairman of the bank, which was regularised by opening dummy loan accounts and transferring the funds to the current account. These dummy loan accounts were closed later by allowing overdrawals in the current accounts. By periodically resorting to such kite – flying, an amount of Rs1010.00 lakh had been siphoned off from the bank without any security there against.

Mahata Phule was a leading reformer of his time. It is ironical that a Bank should be named after him, and its directors resort to unfair means for their personal gains.

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