New Delhi, Oct 30: In a major ruling affecting the banking sector, the Supreme Court has held that Reserve Bank of India cannot grant banking licence to cooperative societies registered under multi-state act without the Nabard declaring it as a state, central or primary cooperative bank. A bench comprising Justice S N Variava and Justice H K Sema gave this ruling while directing the RBI to forthwith revoke the banking licence given to the apex cooperative bank of Urban Bank of Maharashtra and Goa Ltd.
Rejecting the contention of RBI that it was competent to grant licence to a cooperative bank under Multi State Act, the bench said so far as banking regulation act was concerned, the term "cooperative bank" had a definite meaning and the RBI could not go by any other meaning given to the same term for the purpose of issuing banking licence.
"We hold that the RBI by virtue of its power under Section 22 of the Banking Regulation Act cannot grant licence to any cooperative bank unless it is a state cooperative bank or a central cooperative bank or a primary cooperative bank. It would be necessary that a declaration under the Nabard Act must be first obtained," Justice Variava said writing for the bench.
Bureau Report