MARGAO
After being in the banking business for 48 long years since it was established in 1972, the Madgaum Urban Co-operative Bank (MUCB) has finally ceased to carry on banking business with effect from the close of business on Thursday.
In a major development, the Reserve Bank of India (RBI) has ordered the cancellation of the license to the Margao-headquartered bank to carry on the banking business in India. An order issued by the RBI has directed the Chief Executive Officer of the MUCB that the bank should not carry on business in India and stop conducting banking business, including acceptance and repayment of depositors with immediate effect.
“The Reserve Bank of India, having been satisfied that there is no improvement in the financial position of the Madgaum Urban Co-operative Bank Ltd and the affairs of the bank are being conducted in a manner detrimental to the interests of the depositors, has decided to cancel the license granted to the bank to carry on banking business in India under section 22 read with section 56 of the Banking Regulation Act, 1949”, the order stated.
The MUCB CEO has been directed to display a copy of the order at a prominent place in the bank business premises for the information of the public.
RBI Deputy General Manager, Abhinav Pushp has further directed the CEO to send back the license issued to the bank along with all branch authorizations issued under section 23 read with section 56 of the BR Act, 1949 to the RBI by return post.
The RBI has warned that failure to comply with any of the requirements of law will render the MUCB and its management liable for prosecution in terms of section 48 of the Act.
The RBI’s action comes against the backdrop of the notice issued to MUCB on February 23 last asking the bank to show cause within one month why the license issued to the bank should not be withdrawn and the bank liquidated.
MUCB, however, had replied back saying the RBI may take steps to resolve the issue by initiating measures for the merger of the bank with any other banking institution.
The RBI order on cancellation of the banking license comes a little more than a two years after the RBI had placed the Madgaum Urban Co-operative Bank under directions vide Directive dated April 26, 2019 from the close of business on May 02, 2019 for a period of six months. The validity of these directions and restrictions was extended from time to time. The last direction was scheduled to end on August 2.
Since April 2019 when the RBI had imposed restrictions on MUCB, beginning with the restriction on withdrawal of deposits, the MUCB Board of Directors had initiated dialogue with Maharashtra-based PMC and TJSB Banks, to explore the possibility of merger of the Margao-based bank into these banks, but in vain.
The MUCB Board of Directors had also knocked the government doors to save the bank from going for liquidation, but again in vain.
