RBI has cancelled license of these two banks, Now what will happen to customers of these Banks
The Reserve Bank of India (RBI), vide order dated January 12, 2024, has cancelled the license of Shree Mahalaxmi Mercantile Co-operative Bank Ltd., Dabhoi and The Hiriyur Urban Co-operative Bank Ltd., Hiriyur. Consequently, the bank ceases to carry on banking business, with effect from the close of business on January 12, 2024. The Registrar of Cooperative Societies, Gujarat and The Registrar of Cooperative Societies, Karnataka have also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.
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 Section 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.
Now what will happen to customers?
On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of ₹5,00,000/- (Rupees Five Lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of the DICGC Act, 1961. As per the data submitted by the bank 99% of the depositors are entitled to receive full amount of their deposits from DICGC. As on September 30, 2023, DICGC has sanctioned ₹24.58 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.
