RBI cancels the license of Co-operative Bank, Know the Bank Name Here
By order dated June 17, 2022, the Reserve Bank of India (RBI) has now revoked the license of “Millath Co-operative Bank Ltd., Davangere, Karnataka.” As a result, as of the close of business on June 18, 2022, the bank stops conducting banking activity. Additionally, order for the bank’s closure and the appointment of a liquidator has been requested from the Registrar of Cooperative Societies in Karnataka.
The Reserve Bank terminated the bank’s license due to:
- The bank lacks sufficient capital and earning potential. Therefore, it does not adhere to the rules of Sections 11(1) and 22(3)(d) read in conjunction with Section 56 of the Banking Regulation Act, 1949.
- The bank has not complied with Sections 22(3)(a), 22(3)(b), 22(3)(c), 22(3)(d), and 22(3)(e) of the Banking Regulation Act, 1949, read with Section 56;
- The interests of the bank’s depositors are harmed by the bank’s continued existence;
- With its current financial situation, the bank would be unable to fully reimburse its current depositors; and
- If the bank is permitted to continue operating its banking business, the public interest would suffer.
2. Millath Co-operative Bank Limited, Davangere, Karnataka, is immediately forbidden from engaging in 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, as a result of the cancellation of its licence.
3. Upon liquidation, every depositor is entitled to receive from the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to the terms of the DICGC Act, 1961, the deposit insurance claim amount of his or her deposits up to a monetary ceiling of 5,00,000/- (Rupees five lakh only). All depositors will get the full value of their deposits from the Deposit Insurance and Credit Guarantee Corporation, according to information provided by the bank (DICGC). According to Section 18A of the DICGC Act, 1961, DICGC has already paid out 10.38 crore of the total insured deposits as of May 18, 2022, depending on the expressed willingness of the affected bank depositors.