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RBI cancels licence of Madhavpura Mercantile Co-op Bank

The RBI has cancelled license of the bank and the matter has been forwarded to central registrar of the cooperatives who will decide on the future of the bank

June 06, 2012 12:14 IST | India Infoline News Service
The Reserve Bank of India (RBI) has cancelled the license of Ahmedabad-based Madhavpura Mercantile Cooperative Bank (MMCB) on 4th June.
According to MMCB chief executive officer BKR Maruthy, the RBI has cancelled license of the bank and the matter has been forwarded to central registrar of the cooperatives who will decide on the future of the bank and its depositors.
In March 2001, the bank faced its first crisis when depositors had withdrawn their money due to a major payment default by share broker Ketan Parekh. Mr Parekh had illegally borrowed Rs. 8 billion money from the MMCB. Back in 2001, after the intervention from LK Advani— the then deputy prime minister—strict RBI action was postponed and the bank was given a chance of revival. However, MMCB didn’t do well over the years.
The bank reported a negative networth of Rs. 13.47 billion for FY10-11. Not convinced with the bank's recovery measures, in March 2012 the central bank issued a show-cause notice to MMCB, asking why its license should not be cancelled.

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