On 23/05/1966, Karnataka Rajya Kaigarika Vanijya Sahakara Bank Niyamitha, Bangalore (Karnataka), applied to the competent authority for issuance of Banking licence.
Reserve Bank of India finally passed the order rejecting the application of Karnataka Rajya Kaigarika Vanijya Sahakara Bank Niyamitha, Bangalore (Karnataka), to carry on banking business in India.
Karnataka Rajya Kaigarika Vanijya Sahakara Bank N., established on 20/10/1952 is located at Bull temple road, Bangalore. Bharat Rathna Sir.M.Vishveshwaraya was instrumental in starting this federation, earlier called as Mysore Central Co-operative Rural Industrial Financing Bank. The bank has 37 branches spread throughout Karnataka state
The Board for Financial Supervision (BFS), in its 171st meeting held on August 12, 2009, had directed that there should be no unlicenced bank as on March 31, 2010 and for this limited purpose, as a one-time measure and for a limited period, the Capital to Risk Assets Ratio (CRAR) was prescribed at a minimum of 2% as against the regulatory requirement of 9%.
However, the bank was not able to achieve minimum CRAR of 2% as on March 31, 2010 for considering its application for grant of banking licence. The position was also brought to the notice of the State Government and concerns of RBI had been brought to the attention of various stakeholders, through the Task Force for Urban Co-operative Banks (TAFCUB).
In the last few years, the bank had not adhered to Operational Instructions by accepting fresh deposits and allowing premature withdrawal of deposits. There was total disregard to the Operational Instructions by the Board. The bank had not made any efforts for closing six loss making branches for which special permission was granted by RBI. The bank was not able to sell any of its prime properties to improve its net worth. No infusion of capital by State Govt. has taken place and no efforts were made to explore the possibility of merger.
Reserve Bank of India, therefore, took the decision of rejection of application of the bank for grant of licence, in the interest of bank’s depositors. With the rejection of application for grant of licence and commencement of liquidation proceedings, the process of paying the depositors of Karnataka Rajya Kaigarika Vanijya Sahakara Bank Niyamitha, Bangalore (Karnataka), the amount insured as per the DICGC Act, 1961 will be set in motion subject to the terms and conditions of the Deposit Insurance Scheme.