In an order dated July 27th, 2021 the Reserve Bank of India has cancelled the licence of The Madgaum Urban Co-operative Bank Limited, Margao, Goa. Consequently, the bank ceases to carry on banking business, with effect from the close of business on July 29, 2021.
The Office of Registrar of Cooperative Societies, Goa 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 the bank does not have adequate capital and earning prospects leading to its inabilities in complying with several provisions of the Banking Regulation Act.
In a release the RBI says that the continuance of the bank is prejudicial to the interests of its depositors as 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.
Consequent to the cancellation of its licence, the Madgaum Urban Co-operative Bank Limited, Margao, Goa is prohibited from conducting the business of ‘banking’ which includes acceptance of deposits and repayment of deposits with immediate effect.
With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of The Madgaum Urban Co-operative Bank Limited, Margao, Goa as per the DICGC Act, 1961 will be set in motion.
As per the data submitted by the bank, about 99% 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.