Section 13D of The Deposit Insurance and Credit Guarantee Corporation Act, 1961 in hindi
Circumstances in which Reserve Bank may require winding up of co-operative banks.
1[13D. Circumstances in which Reserve Bank may require winding up of co-operative banks.--(1) The circumstances referred to in sub-clause (ii) of clause (gg) of section 2 (being circumstances in which the Reserve Bank may require the winding up of a co-operative bank) are the following, namely:--
- (a)that the co-operative bank has failed to comply with the requirements specified in section 11 of the Banking Regulation Act, 1949 (10 of 1949); or
- (b)that the co-operative bank has by reason of the provisions of section 22 of the said Act become disentitled to carry on banking business in India; or
- (c)that the co-operative bank has been prohibited from receiving fresh deposits by an order under sub-section (4) of section 35 of the said Act or under clause (b) of sub-section (3A) of section 42 of the Reserve Bank of India Act, 1934 (2 of 1934); or
- (d)that the co-operative bank having failed to comply with any requirement of the Banking Regulation Act, 1949 (10 of 1949), other than the requirements laid down in section 11 thereof, has continued such failure or, having contravened any provision of that Act has continued such contravention beyond such period or periods as may be specified in that behalf by the Reserve Bank from time to time, after notice in writing of such failure or contravention has been conveyed to the co-operative bank; or
- (e)that the co-operative bank is unable to pay its debts; or
- (f)that in the opinion of the Reserve Bank--
- (i)a compromise or arrangement sanctioned by a competent authority in respect of the co-operative bank cannot be worked satisfactorily with or without modifications, or
- (ii)the continuance of the co-operative bank is prejudicial to the interests of its depositors.
- (2)Without prejudice to the provisions of any other law for the time being in force, a co-operative bank shall, for the purpose of clause (e) of sub-section (1), be deemed to be unable to pay its debts:--
- (i)if, on the basis of the returns, statements or information furnished to the Reserve Bank under or in pursuance of the provisions of the Banking Regulation Act, 1949 (10 of 1949), the Reserve Bank is of opinion that the co-operative bank is unable to pay its debts; or
- (ii)if the co-operative bank has refused to meet any lawful demand made at any of its offices or branches within two working days, if such demand is made at a place where there is an office, branch or agency of the Reserve Bank, or within five working days if such demand is made elsewhere and, in either case, the Reserve Bank Certifies in writing that the co-operative bank is unable to pay its debts.]
Summary
- Section 13D lists the specific situations where the Reserve Bank of India can force a co-operative bank to close down (wound up).
- A bank can be closed if it fails to maintain the required amount of capital or loses its legal license to do banking business.
- The Reserve Bank can act if a bank has been legally banned from accepting new deposits from the public.
- Closing orders can be issued if a bank continues to break rules after being given a formal written warning to stop.
- A bank is targeted for closure if it cannot pay the money it owes to its customers within a specific number of days.
- Winding up is required if the Reserve Bank believes the bank is being run in a way that harms the people who kept their money there.
Practical examples
FAQ
1. When can the Reserve Bank of India force a co-operative bank to shut down under the Deposit Insurance and Credit Guarantee Corporation Act, 1961?
Under Section 13D of the Act, the Reserve Bank can require closure if the bank fails to pay its debts, loses its banking license, ignores formal warnings about rule-breaking, or is run in a way that hurts its depositors.
2. How does the Deposit Insurance and Credit Guarantee Corporation Act, 1961 define a bank being unable to pay what it owes?
According to Section 13D, a bank is deemed unable to pay if it refuses a customer's lawful demand for money within two working days at a city with a Reserve Bank office, or within five working days anywhere else.
3. Can a co-operative bank be closed if a rescue plan is not working out?
Yes, under Section 13D of the Act, if the Reserve Bank believes a previously approved rescue plan (a compromise or arrangement) cannot be carried out satisfactorily, it can order the bank to be wound up.
4. Does a bank get a warning before being closed for minor rule-breaking?
Yes, Section 13D states that for rules other than capital requirements, the Reserve Bank must give a notice in writing first and the bank must continue to break the rule after that notice before closure is required.
Test yourself
Q1.Under Section 13D of the Deposit Insurance and Credit Guarantee Corporation Act, 1961, within how many working days must a co-operative bank meet a demand for money at a place where there is no Reserve Bank office to avoid being deemed unable to pay its debts?
Q2.How does Section 2 of the Deposit Insurance and Credit Guarantee Corporation Act, 1961, connect to the closure rules in Section 13D?
Q3.Under Section 13D of the Deposit Insurance and Credit Guarantee Corporation Act, 1961, what is one reason the Reserve Bank might require a bank to be wound up regarding its banking license?
Q4.According to Section 13D of the Deposit Insurance and Credit Guarantee Corporation Act, 1961, whose interests is the Reserve Bank protecting when it decides a bank's continued operation is prejudicial?
Q5.Under Section 13D of the Deposit Insurance and Credit Guarantee Corporation Act, 1961, what must happen after the Reserve Bank gives a written notice about a rule violation?