The Reserve Bank of India (RBI) has cancelled the license of the Madgaum Urban Co-operative Bank Limited. The bank now ceases to carry on banking business, with effect from 29th July 2021.
The office of Registrar of Cooperative Societies has been requested to issue an order for winding up the bank and appoint a liquidator for it, the RBI said.
The Reserve Bank cancelled the licence of the bank as the bank does not have adequate capital and earning prospects, the central bank said. “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 RBI said, adding, 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, the RBI said.
Consequent to the cancellation of its licence, The Madgaum Urban Co-operative Bank is prohibited from conducting the business of ‘banking’ which includes 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, the RBI said.
With the cancellation of license and commencement of liquidation proceedings, the process of paying the depositors as per the DICGC Act, 1961 will be set in motion, the RBI said.
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), the central bank said.
On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rupees five lakh from the DICGC subject to the provisions of the DICGC Act, 1961, the RBI said.
