RBI has cancelled this bank’s license, here is what will happen to depositors’ money
The Reserve Bank of India on Tuesday said it has cancelled the licence of Karad Janata Sahakari Bank Ltd in Maharashtra as it does not have adequate capital and earning prospects.
More than 99 per cent of the depositors of the bank will get full payment of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC), the RBI said in a statement.
With the cancellation of licence and beginning of liquidation proceedings, the process of paying the depositors of Karad Janata Sahakari Bank will be set in motion.
On liquidation, every depositor is entitled to repayment of their deposits up to ₹ 5 lakh only from the DICGC.
After cancellation of licence from close of business hour on December 7, the bank cannot work anymore, which includes taking deposits and repaying deposits.
The RBI said the bank was under “all inclusive directions” since November 7, 2017. The Commissioner for Cooperation and Registrar of Cooperative Societies in Maharashtra has been asked to issue an order for winding up the bank and appointing a liquidator.
The RBI said it cancelled the licence of the bank as it “does not have adequate capital and earning prospects”. As such, it does not comply with the provisions of the Banking Regulation Act, 1949.
“The continuance of the bank is prejudicial to the interests of its depositors,” the RBI said, adding the bank in its present financial position would be unable to pay its depositors in full.
The RBI said, “Public interest would be adversely affected if the bank is allowed to carry on its banking business any further.”