The Reserve Bank of India cancelled the license of Karnataka based Shushruti Souharda Sahakara Bank Niyamita and Maharashtra based Malkapur Urban Co-operative Bank Limited on Wednesday.
As per the data submitted by the Shushruti Souharda Sahakara Bank Niyamita, 91.92% of the depositors and as per the data submitted by Malkapur Urban Co-operative Bank Limited, 97.60% of the depositors will be receiving the full amount of their deposits from DICGC.
A press release issued by the RBI reads, Shushruti Souharda Sahakara Bank Niyamita, Bengaluru ceases to carry on banking business, with effect from the close of business on July 05, 2023. The Registrar of Cooperative Societies, Bengaluru has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.
Besides, the Malkapur Urban Co-operative Bank Limited, Buldhana, Maharashtra ceases to carry on banking business, with effect from the close of business on July 05, 2023. The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.
The Reserve Bank cancelled the license of both the banks because they do not have adequate capital and earning prospects. As such, they do not comply with the provisions of Section 11(1) and Section 22 (3) (d) read with Section 56 of the Banking Regulation Act, 1949.
Besides, these banks have failed to comply with the requirements of Sections 22(3) (a), 22 (3) (b), 22(3)(c), 22(3) (d) and 22(3)(e) read with Section 56 of the Banking Regulation Act, 1949. The continuance of these banks is prejudicial to the interests of their depositors.
The banks with their present financial position would be unable to pay their present depositors in full and public interest would be adversely affected if these banks are allowed to carry on their banking business any further, the press release added.
On liquidation, every depositor would be entitled to receive a deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5,00,000/- (Rupees five lakh only) from Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of the DICGC Act, 1961.
As per the data submitted by the Shushruti Souharda Sahakara Bank Niyamita, 91.92% of the depositors are entitled to receive the full amount of their deposits from DICGC. As on May 31, 2023, DICGC has already paid Rs 54.16 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961 based on the willingness received from the concerned depositors of the bank.
And, as per the data submitted by Malkapur Urban Co-operative Bank Limited, 97.60% of the depositors are entitled to receive the full amount of their deposits from DICGC. The latter has already paid Rs 496.98 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961 based on the willingness received from the concerned depositors of the bank.
Earlier, about ten days ago the RBI had cancelled the licence of Mahalaxmi Cooperative Bank Ltd., Dharwad, Karnataka but allowed it to work as NBFC.