RBI cancels licence of Co-operative Bank for Non-Compliance of Banking Regulations:

RBI cancels licence of Co-operative Bank for Non-Compliance of Banking Regulations The Reserve Bank of India (RBI) has cancelled the licence of the Co-operative Bank for Non-Compliance of Banking Regulations. RBI cancelled the licence of “Musiri Urban Co-operative Bank Ltd”. Consequently, the bank ceases to carry on banking business, with effect from the close of business on December 29, 2023. The Registrar of Cooperative Societies, Tamil Nadu 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 licence of the bank as:

• The bank does not have adequate capital and earning prospects. As such, it does not comply with the provisions of Section 11(1) and Section 22 (3)(d) read with Section 56 of the Banking Regulation Act, 1949.
• The bank has 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 the bank is prejudicial to the interests of its depositors;
• The bank with its present financial position would be unable to pay its present depositors in full; and
• Public interest would be adversely affected if the bank is allowed to carry on its banking business any further.

With immediate effect, "Musiri Urban Co-operative Bank Ltd., Musiri" is prohibited from conducting the business of "banking," which includes, among other things, accepting deposits and repaying deposits, as defined in Section 5(b) read with Section 56 of the Banking Regulation Act, 1949. On liquidation, each depositor would be entitled to a deposit insurance claim sum of Rs.5,00,000 (Rupees five lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to the requirements of the DICGC Act, 1961. According to the bank's data, 98.67% of depositors are eligible to retrieve the full amount of their deposits from DICGC. As of September 30, 2023, the DICGC had already paid Rs.134.42 lakh of the total insured deposits under the requirements of Section 18A of the DICGC Act, 1961, based on the willingness of the bank's concerned depositors.