Kolhapur: RBI cancels license of Subhadra Local Area Bank

The Reserve Bank of India (RBI) has taken action against another bank in Maharashtra. The banking license of Subhadra Local Area Limited Bank in Kolhapur has been revoked by the Reserve Bank. Started by industrialist Annasaheb Mohite, the bank has 13 branches in Kolhapur-Sangli district. The bank is said to be merging elsewhere.

The Reserve Bank had earlier imposed restrictions on Subhadra Bank's transactions. The RBI on Thursday banned the bank from operating. The RBI's action has caused confusion among bank depositors.

The Reserve Bank of India (RBI) on December 24 cited problem in the way the bank was run.

The licence has been cancelled under Section 22 (4) of the Banking Regulation Act, 1949 and the order is made effective from close of business on December 24, 2020, the RBI said.

Explaining the action, the RBI said the cancellation is on account of the fact that the affairs of the Subhadra Bank were conducted in a manner detrimental to the interests of its present and future depositors.

Public interest would be adversely affected if it is allowed to continue to do the business in the manner in which it is functioning, the RBI said.

Further, the general character of the management is considered prejudicial to the interest of the present and future depositors and the bank had breached the minimum net worth requirement for two quarters in the financial year 2019-20, the RBI said.

“Consequent to the cancellation of the licence, Subhadra Local Area Bank Ltd is prohibited from conducting the business of ‘banking’ as defined in Section 5(b) or any additional business envisaged under Section 6 of the Banking Regulation Act, 1949, with immediate effect,” the RBI said in a release.