RBI shuts down Karad Janata Sahakari Bank — deposits up to ₹5 lakh will be refunded
Dec 10, 2020, 15:16 IST
The RBI on Tuesday said it has cancelled the licence of The Karad Janata Sahakari Bank Ltd, Karad, 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 Reserve Bank said in a statement.
With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of The Karad Janata Sahakari Bank will be set in motion.
On liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of Rs 5 lakh only from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per usual terms and conditions.
Consequent to the cancellation of its licence from close of business on December 7, the bank has been prohibited from conducting the business of 'banking' which includes acceptance of deposits and repayment of deposits with immediate effect.
Giving details, the RBI said the bank was under "all inclusive directions" since November 07, 2017. 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.
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 relevant provisions of the Banking Regulation Act, 1949.
"The continuance of the bank is prejudicial to the interests of its depositors," it said, and added the bank with its present financial position would be unable to pay its present depositors in full.
Also, public interest would be adversely affected if the bank is allowed to carry on its banking business any further.
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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 Reserve Bank said in a statement.
With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of The Karad Janata Sahakari Bank will be set in motion.
On liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of Rs 5 lakh only from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per usual terms and conditions.
Consequent to the cancellation of its licence from close of business on December 7, the bank has been prohibited from conducting the business of 'banking' which includes acceptance of deposits and repayment of deposits with immediate effect.
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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 relevant provisions of the Banking Regulation Act, 1949.
"The continuance of the bank is prejudicial to the interests of its depositors," it said, and added the bank with its present financial position would be unable to pay its present depositors in full.
Also, public interest would be adversely affected if the bank is allowed to carry on its banking business any further.
SEE ALSO:
One research firm says shares of Infosys, HCL Tech, and TCS may see another surge — here's why
India’s desi-GPS is now in the same league as the US, Russia and China — can scan 1,500 kilometres beyond its own borders
Canada has enough COVID-19 vaccine doses to cover each citizen five times over while the fate of 67 poor countries remains undecided