RBI cancels license of Co-operative Bank Limited; Know Reason Why?:

RBI cancels license of Co-operative Bank Limited; Know Reason Why? The Reserve Bank of India (RBI) has cancelled the license of “The Malkapur Urban Co-operative Bank Limited, Buldhana, Maharashtra” for non-compliance with directions of RBI, vide order dated July 04, 2023. As per official release, consequently, the bank ceases to carry on banking business, with effect from the close of business on July 05, 2023. The Maharashtra Commissioner for Cooperation and Registrar of Cooperative Societies has also been asked to issue an order to wound up the bank and appoint a liquidator. The Reserve Bank cancelled the license 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, "The Malkapur Urban Co-operative Bank Limited, Buldhana, Maharashtra" 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, every depositor would be entitled to receive 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 DICGC Act, 1961. According to the bank's records, 97.60% of depositors are eligible to retrieve the full amount of their deposits from DICGC. Based on the desire of the bank's depositors, the DICGC has already paid Rs.496.98 crore of the total insured deposits under Section 18A of the DICGC Act, 1961. While in Other Case, RBI cancels the license of Shushruti Souharda Sahakara Bank Niyamita, Bengaluru. As a result, the bank ceases to conduct banking operations on July 5, 2023, at the close of business. The Registrar of Cooperative Societies in Bengaluru has also been asked to issue an order for the bank's liquidation and appoint a liquidator. RBI cancelled the licence of Shushruti Souharda Sahakara Bank Niyamita because, i) 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. ii) 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; iii) The continuance of the bank is prejudicial to the interests of its depositors; iv) With its current financial situation, the bank would be unable to pay its current depositors in full. v) If the bank is permitted to continue operating as a bank, the public interest will suffer. As a result of the cancellation of its licence, "Shushruti Souharda Sahakara Bank Niyamita, Bengaluru" is prohibited from conducting 'banking' business, 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, with immediate effect. On liquidation, every depositor would be entitled to receive 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 DICGC Act, 1961. As per the data submitted by the bank, 91.92% of the depositors are entitled to receive 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.