As far as the urban cooperative banking sector is concerned this month is not going well for them. In the first week of this month, RBI cancelled the license of two cooperative banks and now on Tuesday, the apex bank cancelled the license of Karnataka based Sri Sharada Mahila Cooperative Bank and Maharashtra based Harihareshwar Sahakari Bank.
It is said that as per the data submitted by the Harihareshwar Sahakari bank, about 99.96% of the depositors are entitled to receive the full amount of their deposits from DICGC. As on March 08, 2023, DICGC has already paid Rs 57.24 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.
Whereas, according to the data submitted by Sri Sharada Mahila Cooperative Bank, about 97.82% of the depositors are entitled to receive the full amount of their deposits from DICGC. As on June 12, 2023, DICGC has already paid Rs 15.06 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.
A press release issued by the RBI reads, “The Reserve Bank of India has cancelled the licence of “Harihareshwar Sahakari Bank Ltd., Wai, Satara”. Consequently, the bank ceases to carry on banking business, with effect from the close of business on July 11, 2023”.
“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”.
Similarly, RBI has cancelled the licence of “Sri Sharada Mahila Co-operative Bank Ltd., Tumkur, Karnataka and requested the Registrar of Cooperative Societies, Karnataka 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. 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.
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.
Besides, 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. Public interest would be adversely affected if the bank is allowed to carry on its banking business any further, RBI press release added.
Readers would recall that prior to cancelling the license, RBI on 7th July 2023, extended the direction on Sri Sharada Mahila Co-operative Bank for a further period of three months from July, 09, 2023 to October 08, 2023.
Earlier, this month, RBI cancelled the license of Malkapur Urban Cooperative Bank and Shushruti Souharda Sahakara Bank.