Reserve Bank of India has, through and order dated May 28, 2021 cancelled the licence of Shivajirao Bhosale Sahakari Bank Ltd., Pune, Maharashtra. Consequently, the bank ceases to carry on banking business, with effect from the close of business on May 31, 2021.
The 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 Reserve Bank cancelled the licence of the bank as it does not have adequate capital and earning prospects.
In a press release the RBI has said that “The continuance of the Shivajirao Bhosale Sahakari 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”, the note reads.
Consequent to the cancellation of its licence the UCB is prohibited from conducting the business of ‘banking’ which includes acceptance of deposits and repayment of deposits as defined in the Banking Regulation Act, 1949 with immediate effect.
With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of Shivajirao Bhosale Sahakari Bank, as per the DICGC Act, 1961 will be set in motion.
As per the data submitted by the bank, more than 98% of the depositors will receive full amounts of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC).
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 DICGC subject to the provisions of the DICGC Act, 1961.
The UCB was placed under Directions from the close of business on May 04, 2019. RBI has extended the directions on the UCB from time to time. Finally, on May 30, seeing no ray of hope it decided to cancel its licence.
