The Reserve Bank of India has cancelled the license of one more urban cooperative bank- Jai Prakash Narayan Nagari Sahakari Bank and extended the period of directions on Guru Raghavendra Sahakara Bank on Tuesday.
As per the data submitted by the bank, about 99.78% of the depositors are entitled to receive the full amount of their deposits from DICGC. As on September 21, 2023, DICGC has already paid Rs 23.89 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961 based on the willingness received from the concerned depositors of the bank.
On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5,00,000/- (Rupees five lakh only) from Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of DICGC Act, 1961.
Jai Prakash Narayan Nagari Sahakari Bank Ltd., Basmathnagar, Maharashtra ceases to carry on banking business, with effect from the close of business on February 6, 2024. The Commissioner for Co-operation 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 Reserve Bank of India cancelled the licence of the bank on various grounds which included the bank does not have adequate capital and earning prospects. As such, it 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.
Besides, the bank has failed to comply with the requirements of Sections 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 and the continuance of the bank is prejudicial to the interests of its depositors, RBI press release reads.
It further added, 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 RBI extended the period of directions on Guru Raghavendra Sahakara Bank for a further period of three months from the close of business on February 10, 2024 to the close of business on May 10, 2024, subject to review.