RBI Cancels Licenses of Two Co-operative Banks

Mumbai: The Reserve Bank of India (RBI) on Saturday said that it has cancelled the licences of Musiri Urban Cooperative Bank and Faiz Mercantile Cooperative Bank for regulatory noncompliance. Consequently, the two co-operative banks are barred from carrying out banking business which includes, among other things, acceptance of deposits and repayment of deposits. The central bank has requested the concerned authorities to issue orders for winding up the banks and appoint a liquidator in each case. Licenses of the two banks have been cancelled as they do not have adequate capital and earning prospects. Also, the continuance of the banks is prejudicial to the interests of its depositors. The RBI said that public interest would be adversely affected if the banks were allowed to carry on its banking business any further. “Consequent to the cancellation of its licence, “Musiri Urban Co-operative Bank Ltd., Musiri” 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,” the RBI said in a media release. The RBI said that on liquidation, every depositor of Musiri Urban Cooperative Bank would be entitled to receive deposit insurance claim amount up to a monetary ceiling of Rs 5 lakh from Deposit Insurance and Credit Guarantee Corporation (DICGC). As per the data submitted by the bank, 98.67% of the depositors are entitled to receive full amount of their deposits from DICGC. “As on September 30, 2023, DICGC has already paid Rs 134.42 lakh 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,” the RBI release said. Similarly, in case of Faiz Mercantile Cooperative Bank also, every depositor would be entitled to receive deposit insurance claim amount of his/ her deposits up to a monetary ceiling of Rs 5 lakh from DICGC subject to the provisions of DICGC Act, 1961. “As per the data submitted by the bank, 99.87% of the depositors are entitled to receive full amount of their deposits from DICGC. As on October 30, 2023, DICGC has already paid Rs 7.07 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,” the RBI said.

About Post Author