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Team Studycafe | Aug 19, 2022 | Views 1121

Reserve Bank of India Cancels Licence of Co-operative Bank; Check Reason and Name of Bank

Reserve Bank of India Cancels Licence of Co-operative Bank; Check Reason and Name of Bank

The Reserve Bank of India (RBI) has cancelled the licence of “Deccan Urban Co-operative Bank Ltd., Vijayapur, Karnataka”. Consequently, the bank ceases to carry on banking business, with effect from the close of business on August 18, 2022 vide order dated August 17, 2022.

Additionally, an order for the bank’s closure and the appointment of a liquidator have been requested from the Commissioner for Cooperation and Registrar of Cooperative Societies in Karnataka.

The Reserve Bank cancelled the license of the bank as:

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) The bank with its present financial position would be unable to pay its present depositors in full; and

v) Public interest would be adversely affected if the bank is allowed to carry on its banking business any further.

With immediate effect, “Deccan Urban Co-operative Bank Ltd., Vijayapur, Karnataka” is forbidden 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. This prohibition follows the cancellation of the bank’s licence.

Each depositor is entitled to receive a deposit insurance claim amount from the Deposit Insurance and Credit Guarantee Corporation (DICGC) upon liquidation, up to a maximum of Rs. 5,00,000 (Rupees five lakh only), subject to the requirements of the DICGC Act, 1961. More than 99% of depositors are eligible to retrieve the full value of their deposits from DICGC, according to data provided by the bank. According to Section 18A of the DICGC Act, 1961, DICGC has already paid out 13.07 crore of the total insured deposits as of August 6, 2022, depending on the expressed willingness of the affected bank depositors.

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