Winding up by High Court :

The High Court may order winding up of a banking company on account of (a) The banking company is unable to pay its debts, (b) An application of winding up had been made by the Reserve Bank under the provisions of the Banking Regulation Act (Sections 37 and 38)

The RBI is to make an application for winding up (under Section 38 of the BR Act) and under Section 35 (4) if directed by the Central Government. Central Government may give such direction, based on the report of inspection or scrutiny made by the Reserve Bank and on account of the situation that the affairs of the bank are being conducted to the detriment of the interests of the depositors. However before giving such direction, the banking company would be given an opportunity to make a representation in connection with the inspection/scrutiny report.

In the following circumstances, the Reserve Bank of India can apply for winding up of a banking company.

– Non-compliance with the requirements of Section 11 regarding minimum paid up capital and reserves.

– Prohibition to accept fresh deposits under Section 35(4) of the Banking Regulation Act or Section 42 (3A)(b) of the Reserve Bank of India Act

– Failure to comply with the requirements of the applicable provisions of the Banking Regulation Act and the Reserve Bank of India Act

Official Liquidator:

Section 38A of the Banking Regulation Act provides for appointment of an official liquidator attached to the High Court by the Central Government, to conduct the winding up proceedings of a banking company.