At Rs5 lakh each, 99 pc of depositors will receive full deposits
MUMBAI/December 08-2020: The Reserve Bank of India (RBI) has, on December 7, 2020 cancelled the licence of The Karad Janata Sahakari Bank, Maharashtra with effect from the close of business on December 7, 2020.
The bank was under ‘All Inclusive Directions’ since November 07, 2017. RBI said that the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra, has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.
On liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of Rs5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per usual terms and conditions. RBI said more than 99 per cent of the depositors of the bank will get full payment of their deposits from DICGC.
The Reserve Bank cancelled the licence of the bank on several counts including the absence of adequate capital. RBI said, the bank doesn’t have earning prospects too.
As such, the bank 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 also 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,” RBI added.
The official release issued by RBI said the continuance of the bank is prejudicial to the interests of its depositors, and the bank with its present financial position would be unable to pay its present depositors in full.
And hence, the public interest would be adversely affected if the bank is allowed to carry on its banking business any further.
With immediate effect
“Consequent to the cancellation of its licence, The Karad Janata Sahakari Bank Ltd, Karad, Maharashtra, is prohibited from conducting the business of ‘banking’ which includes 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,” said RBI.
With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of The Karad Janata Sahakari Bank as per the DICGC Act, 1961 will be set in motion.