RBI has cancelled the license of 2 cooperative banks. The banking business of both the banks has been closed from today.
RBI Action: Reserve Bank of India has canceled the license of two co-operative banks. RBI has given this information on Tuesday. An order has also been issued to stop banking business of Shri Sharda Mahila Co-operative Bank (Tumkur, Karnataka) and Harihareshwar Sahakari Bank Limited (Y, Satara) from today i.e. 11th July. However, instructions have also been issued to the Cooperative Commissioner and Registrar of Cooperative Societies of both the banks to close the bank and issue an order to appoint a liquidator for the bank.
This is the reason
According to the central bank, both the banks do not have sufficient capital and earning potential. Also, the banks do not comply with the provisions of Section 56, Section 11(1) and Section 22 (3) (d) of the Banking Regulation Act, 1949. The RBI also said that, “Continuance of the bank is detrimental to the interest of its depositors. Also, with the present financial condition, it is not able to make full payment to its existing depositors. Further, the Reserve Bank said, “If the bank continues its banking business, it will affect the public interest.”
What will happen to the customers’ money?
Each customer will be entitled to receive the deposit insurance claim amount of his deposit subject to a monetary limit of Rs.5 lakh as per DICGC regulations.
