The Reserve Bank of India (RBI) cancelled the license of Aurangabad-based Adarsh Mahila Nagrik Sahakari Bank on Friday. According to the press release, 99.77% of the depositors are entitled to receive the full amount of their deposits from DICGC.
As of October 31, 2023, DICGC has already paid Rs 185.38 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.
Consequent to the cancellation of licence, the bank ceases to carry on banking business, with effect from the close of business on December 29, 2023.
The Commissioner and Registrar of Cooperative Societies, Maharashtra have also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.
The Reserve Bank cancelled the license of the bank because 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. The continuance of the bank is prejudicial to the interests of its depositors, said RBI in its press release.
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.
Consequent to the cancellation of its license, Adarsh Mahila Nagari Sahakari Bank Maryadit, Aurangabad, Maharashtra is prohibited from conducting the business of ‘banking’ which includes, among other things, 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.
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.
In another development, Reserve Bank of India notified The Botad Peoples Co-operative Bank as a non-banking institution. Accordingly, RBI has cancelled the licence dated February 17, 1998, granted to The Botad Peoples Co-operative Bank Ltd., Botad to carry on banking business in India under Section 22 read with Section 56 of the Banking Regulation Act, 1949 with effect from the close of business on December 29, 2023.
This makes it obligatory on the part of The Botad Peoples Co-operative Bank to stop conducting the business of ‘banking’ within the meaning of section 5(b) of the Act ibid, including acceptance of deposits from non-members with immediate effect.
Further, The Botad Peoples Co-operative Bank Ltd., Botad shall ensure to repay unpaid and unclaimed deposits of non-members held by it, whenever demanded, even after being notified as non-banking Institution, says the RBI.