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No possibility of Nagpur DCCB's revival...
claims are to accrue and in such a situation allowing the bank to operate would have been detrimental to its present and future depositors and these banks' applications for licence have to be rejected.
Allaying any fears of damage to the interests of depositors of the bank, if order to liquidate the Bank is passed, it has been staled in the RBI's submissions, that in that eventuality also around 98 per cent depositors' interest is well protected in view of DICGC provisions, which guarantee reftind of up to Rs one lakh to every depositor.
In view of precarious financial condition of the bank, on May 9, 2012, under Section 35 of the BR Act. 1949, it was asked not to accept fresh deposits and to continue with its existing operations only. The bank was also asked to submit to the Reserve Bank of India, a Montreal Action Plan (MAP) with a view to attain licencing criteria up to September 30, 2012. Despite all efforts the bank failed to achieve any thing and its CRAR remained negative. NABARD's finding had been that the bank was not eligible for grant of licence under Section 22 of the BR Act
The bank has been unable to comply with section 11(1). that is minimum capital of Rs one lakh since March 31. 2001 and it is also unlikely that it will be able to comply with that in near future in view of its negative Net Worth.
It has been pointed out to the High Court that these petitions are not maintainable because legality of the impugned order has not been challenged and no bias/mala fides have been alleged. The impugned order has been passed by the RBI. a body of experts and the High Court cannot sit on it. as an appellate authority.
On November 4. 2011. during its statutory inspection, the NABARD had found the bank's financial condition highly unsatisfactory.
For getting licence, the bank should have achieved two criteria
Allaying any fears of damage to the interests of depositors of the bank, if order to liquidate the Bank is passed, it has been staled in the RBI's submissions, that in that eventuality also around 98 per cent depositors' interest is well protected in view of DICGC provisions, which guarantee reftind of up to Rs one lakh to every depositor.
In view of precarious financial condition of the bank, on May 9, 2012, under Section 35 of the BR Act. 1949, it was asked not to accept fresh deposits and to continue with its existing operations only. The bank was also asked to submit to the Reserve Bank of India, a Montreal Action Plan (MAP) with a view to attain licencing criteria up to September 30, 2012. Despite all efforts the bank failed to achieve any thing and its CRAR remained negative. NABARD's finding had been that the bank was not eligible for grant of licence under Section 22 of the BR Act
The bank has been unable to comply with section 11(1). that is minimum capital of Rs one lakh since March 31. 2001 and it is also unlikely that it will be able to comply with that in near future in view of its negative Net Worth.
It has been pointed out to the High Court that these petitions are not maintainable because legality of the impugned order has not been challenged and no bias/mala fides have been alleged. The impugned order has been passed by the RBI. a body of experts and the High Court cannot sit on it. as an appellate authority.
On November 4. 2011. during its statutory inspection, the NABARD had found the bank's financial condition highly unsatisfactory.
For getting licence, the bank should have achieved two criteria
minimum CRAR of 4 percem and 2 percent. DefauliinCRR/SLR during one year (default on two occasions are condoned). But it failed to do so.
Other hanks are also operating in the areas, these hanks serve and do serve the same category of population - farmers etc.. so there is no possibility of publie interest suffering adversely, in absence of these banks. The RBI's action against these banks is both in public interest and the interest of their depositors.
Permitting these banks to function in the way. these were functioning would have been prejudicial to the interest of the banks' present and future depositors. These banks failed to attain even relaxed criteria even after grant of extension of time for the purpose. The petitions will be listed for further consideration by the Court on June 20 next.
Advocate S N Kumar represents the Reserve Bank of India. Adv. Mukesh Samarth appeared for the petitioner- Banks.
Other hanks are also operating in the areas, these hanks serve and do serve the same category of population - farmers etc.. so there is no possibility of publie interest suffering adversely, in absence of these banks. The RBI's action against these banks is both in public interest and the interest of their depositors.
Permitting these banks to function in the way. these were functioning would have been prejudicial to the interest of the banks' present and future depositors. These banks failed to attain even relaxed criteria even after grant of extension of time for the purpose. The petitions will be listed for further consideration by the Court on June 20 next.
Advocate S N Kumar represents the Reserve Bank of India. Adv. Mukesh Samarth appeared for the petitioner- Banks.
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