In view of the fact that the Belgaum Catholic Co-operative Bank Ltd., Belgaum had ceased to be solvent, all efforts to revive it in close consultation with the Government of Karnataka had failed and the depositors of the bank were being inconvenienced by continued uncertainty, the Reserve Bank of India delivered the order canceling its licence to the bank after the close of business on August 03, 2010. The Registrar of Co-operative Societies, Karnataka has also been requested to issue an order for winding up of the bank and appoint a Liquidator for the bank. It may be highlighted that on liquidation every depositor is entitled to repayment of his deposits up to a monetary ceiling of Rs.1,00,000/- from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
The bank was granted licence by Reserve Bank of India on December 23, 1986 to commence banking business. The statutory inspection conducted by Reserve Bank with reference to its financial position as on March 31, 2005 revealed several disquieting features in the functioning of the bank. The bank was classified as Grade IV and was placed under operational instructions banning accepting of fresh deposits and premature withdrawal of term deposits, etc. The next inspection conducted with reference to position as on March 31, 2006 revealed that the financial position continued to deteriorate and the operational instruction issued were continued.
Consequent on cancellation of its licence, Belgaum Catholic Co-operative Bank Ltd., Belgaum, (Karnataka) is prohibited from carrying on ‘banking business’ as defined in Section 5(b) of the Banking Regulation Act, 1949(AACS) including acceptance and repayment of deposits.