<p>National Bank for Agriculture and Rural Development (NABARD) has indicated that it would have to recommend to the Reserve Bank of India for cancellation of banking licence issued to The Shimoga District Central Cooperative (DCC) Bank for not complying with financial regulations.<br /><br />A letter to this effect has been written by NABARD Chief General Manager, Mumbai, K Venkateshwara Rao to Karnataka Chief Secretary Subhash Chandra Khuntia recently. The letter states that statutory inspection of the bank revealed that it had failed to meet several regulatory compliances.<br /><br />The letter stated that the DCC bank had a high level of Non-Performing Assets (NPA) due to the four cases of fraud amounting to Rs 61.59 crore. It may be recalled that loans were issued to 183 fictitious persons in 2013 by the bank without mortgaging gold.<br /><br />Besides, the bank had failed to comply with several provisions of the Banking Regulation Act, 1949 such as maintaining a minimum of 7% Capital to Risk Assets Ratio (CRAR).<br /><br />The letter states that bank has showed lack of professional management. “It also throws serious concern about the lack of sensitivity to regulatory requirement.... Kindly be informed that we may consider recommending to RBI for cancellation of banking licence, if the bank does not put in place a capital restoration plan and ensure capital adequacy,” the letter to Khuntia states.</p>
<p>National Bank for Agriculture and Rural Development (NABARD) has indicated that it would have to recommend to the Reserve Bank of India for cancellation of banking licence issued to The Shimoga District Central Cooperative (DCC) Bank for not complying with financial regulations.<br /><br />A letter to this effect has been written by NABARD Chief General Manager, Mumbai, K Venkateshwara Rao to Karnataka Chief Secretary Subhash Chandra Khuntia recently. The letter states that statutory inspection of the bank revealed that it had failed to meet several regulatory compliances.<br /><br />The letter stated that the DCC bank had a high level of Non-Performing Assets (NPA) due to the four cases of fraud amounting to Rs 61.59 crore. It may be recalled that loans were issued to 183 fictitious persons in 2013 by the bank without mortgaging gold.<br /><br />Besides, the bank had failed to comply with several provisions of the Banking Regulation Act, 1949 such as maintaining a minimum of 7% Capital to Risk Assets Ratio (CRAR).<br /><br />The letter states that bank has showed lack of professional management. “It also throws serious concern about the lack of sensitivity to regulatory requirement.... Kindly be informed that we may consider recommending to RBI for cancellation of banking licence, if the bank does not put in place a capital restoration plan and ensure capital adequacy,” the letter to Khuntia states.</p>
