Reserve Bank of Indian cancelled the license of Rajasthan based Sumerpur Mercantile Urban Cooperative Bank and has asked the Rajasthan Registrar of Cooperative societies to issue an order for winding up the bank and appoint a liquidator.
As per the data submitted by the bank, 99.13% of the depositors are entitled to receive the full amount of their deposits from DICGC. As on November 30, 2023, DICGC has already paid Rs 45.22 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.
In its press release RBI said, “The licence of the bank has been cancelled on various grounds including, 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.
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, said RBI.
Consequent to the cancellation of its licence, “Sumerpur Mercantile Urban Cooperative Bank Limited, Sumerpur, Pali, Rajasthan” 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.
It may be needed to know that in the current financial year till 29th February 2024, RBI has cancelled the banking license of 24 urban cooperative banks.