RBI cancels Licence of Jai Prakash Narayan Nagari Sahakari Bank

The Reserve Bank of India (RBI) has cancelled the licence of “Jai Prakash Narayan Nagari Sahakari Bank Ltd., Basmathnagar, Maharashtra” vide order dated February 5, 2024. Consequently, the bank ceases to carry on banking business, with effect from the close of business on February 6, 2024.

The Commissioner for Co-operation and Registrar of Cooperative Societies in Maharashtra has also been asked to issue an order winding up the bank and appoint a liquidator for it.

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.

Consequent to the cancellation of its licence, “Jai Prakash Narayan Nagari Sahakari Bank Ltd., Basmathnagar, Maharashtra” is prohibited from conducting the business of ‘banking’ which includes, among other things, acceptance of deposits and repayment of deposits as defined in Section 5(b) read with Section 56 of the Banking Regulation Act, 1949 with immediate effect.

Upon liquidation, each depositor is entitled to collect the deposit insurance claim amount of his/her savings up to a monetary ceiling of Rs.5,00,000 (Rupees five lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to the rules of the DICGC Act, 1961.

According to the data supplied by the bank, about 99.78% of depositors are eligible to receive the entire amount of their deposits from DICGC. As of September 21, 2023, the DICGC had already paid Rs.23.89 crore of the total insured deposits under Section 18A of the DICGC Act, 1961, based on the willingness of the bank’s depositors.