Category: RBI News

The Reserve Bank of India (RBI) has, vide order dated January 08, 2021 cancelled the licence of Vasantdada Nagari Sahakari Bank Ltd., Osmanabad, Maharashtra to carry on banking business, with effect from the close of business on January 11, 2021. The Commissioner for Cooperation and Registrar of Cooperative Societies (RCS), Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.

The Reserve Bank cancelled the licence of the bank as:

1. the bank has failed to comply with the requirements of Section 11(1) read with Section 56 of BR Act;

2. the bank has become disentitled to carry on the business of banking in India, by reason of the cancellation of its licence issued to it by the Reserve Bank of India, under Section 22(1) read with Section 56 of BR Act as it has failed to comply with the requirements of Section 22(3) (a), 22(3) (b), 22(3) (c), 22(3) (d) and 22(3) (e) of BR Act;

3. continuance of the bank is prejudicial to the interests of its depositors;

4. the bank with its present financial position would be unable to pay its present depositors in full; and

5. it is necessary in public interest and for preventing the affairs of the bank being conducted in a manner detrimental to the interests of its depositors to wind up the affairs of the bank;

2. Consequent to the cancellation of its licence, Vasantdada Nagari Sahakari Bank Ltd., Osmanabad, Maharashtra is prohibited from conducting the business of ‘banking’ which includes acceptance of deposits and repayment of deposits as defined in Section 5(b) read with Section 56 of the Banking Regulation Act, 1949 with immediate effect.

3. With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of Vasantdada Nagari Sahakari Bank Ltd., Osmanabad, Maharashtra as per the DICGC Act, 1961 will be set in motion. On liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of ₹5,00,000/- (Rupees Five lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per usual terms and conditions. More than 99% of the depositors of the bank will get full repayment of their deposits from DICGC.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/924

Today, the Reserve Bank released the 22nd issue of the Financial Stability Report (FSR), which reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability, and the resilience of the financial system in the context of contemporaneous issues relating to development and regulation of the financial sector. The release of FSR was rescheduled to incorporate the first advance estimates of national income for 2020-21 that were released by the National Statistical Office on January 7, 2021.

Highlights:

• In the initial phase of the COVID-19 pandemic, policy actions were geared towards restoring normal functioning and mitigating stress; the focus is now being oriented towards supporting the recovery and preserving the solvency of businesses and households.

• Positive news on vaccine development has underpinned optimism on the outlook, though it is marred by second wave of the virus including more virulent strains.

• Policy measures by the regulators and the government have ensured the smooth functioning of domestic markets and financial institutions; managing market volatility amidst rising spillovers has become challenging especially when the movements in certain segments of the financial markets are not in sync with developments in the real sector.

• Bank credit growth has remained subdued, with the moderation being broad-based across bank groups.

• Performance parameters of banks have improved significantly, aided by regulatory dispensations extended in response to the COVID-19 pandemic.

• The capital to risk-weighted assets ratio (CRAR) of Scheduled Commercial Banks (SCBs) improved to 15.8 per cent in September 2020 from 14.7 per cent in March 2020, while their gross non-performing asset (GNPA) ratio declined to 7.5 per cent from 8.4 per cent, and the provision coverage ratio (PCR) improved to 72.4 per cent from 66.2 per cent over this period.

• Macro stress tests incorporating the first advance estimates of gross domestic product (GDP) for 2020-21 released on January 7, 2021 indicate that the GNPA ratio of all SCBs may increase from 7.5 per cent in September 2020 to 13.5 per cent by September 2021 under the baseline scenario; the ratio may escalate to 14.8 per cent under a severe stress scenario. This highlights the need for proactive building up of adequate capital to withstand possible asset quality deterioration.

• Network analysis reveals that total bilateral exposures among entities in the financial system increased marginally during the quarter-ended September 2020. With the inter-bank market continuing to shrink and with better capitalisation of banks, the contagion risk to the banking system under various scenarios declined as compared to March 2020.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/922

Reserve Bank of India, in public interest, had issued Directions to Kolikata Mahila Co-operative Bank Limited, 8D Krishna Laha Lane, Kolkata – 700012, West Bengal in exercise of its powers vested in it under Sub-Section (1) of Section 35 A read with Section 56 of the Banking Regulation Act, 1949 (AACS) from the close of business on July 09, 2019 as modified from time to time which was last extended upto January 09, 2021. Reserve Bank of India has now, in public interest, further extended the Directions for a period of three months from January 10, 2021 to April 09, 2021. A copy of the Directive is displayed at bank’s premises for perusal of the public.

The issue of the above Directions by Reserve Bank of India should not per se be construed as cancellation of banking licence. The bank will continue to undertake banking business with restrictions till its financial position improves. Reserve Bank of India may consider modifications of these Directions depending upon circumstances from time to time.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/920

The Reserve Bank of India issued Directions to Sri Guru Raghavendra Sahakara Bank Niyamitha, Bengaluru, Karnataka under Section 35A read with Section 56 of the Banking Regulation Act, 1949 vide Directive DOS.CO.UCB.BSD-III/D-2/12.23.283/2019-20 dated January 02, 2020, the validity of which was extended from time to time, last been vide Directive DOR.AID.No.D-02/12.23.283/2020-21 dated July 07, 2020 upto January 10, 2021.

2. The Reserve Bank of India is satisfied that in the public interest, it is necessary to extend the period of operation of the Directive DOS.CO.UCB.BSD-III/D-2/12.23.283/2019-20 dated January 02, 2020, issued to Sri Guru Raghavendra Sahakara Bank Niyamitha, Bengaluru, Karnataka, and as last modified vide Directive DOR.AID.No.D-02/12.23.283/2020-21 dated July 07, 2020. Accordingly, the Reserve Bank of India, in exercise of powers vested in it under sub-section (1) of Section 35A read with Section 56 of the Banking Regulation Act, 1949, hereby directs that the Directive DOS.CO.UCB.BSD-III/D-2/12.23.283/2019-20 dated January 02, 2020 issued to Sri Guru Raghavendra Sahakara Bank Niyamitha, Bengaluru, Karnataka, as modified vide Directive DOR.AID.No.D-02/12.23.283/2020-21 dated July 07, 2020, the validity of which was upto January 10, 2021, shall continue to apply to the bank for a further period of six months from January 11, 2021 to July 10, 2021, subject to review.

3. Other terms and conditions of the Directives under reference shall remain unchanged.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/918