The Reserve Bank of India on Wednesday cancelled the licence of The City Co-operative Bank in Maharashtra due to insufficient capital and prospects for earnings. The Commissioner for Cooperation and Registrar of Cooperative Societies in Maharashtra has been directed to order winding up the bank and appoint a liquidator.
According to RBI, the cooperative bank will cease to conduct banking operations from the close of business hours on June 19, 2024.
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 lakh only from Deposit Insurance and Credit Guarantee Corp.
"As per the data submitted by the bank, about 87% of the depositors are entitled to receive full amount of their deposits from DICGC," RBI said.
As on June 14, 2024, DICGC has already paid Rs 230.99 crore of the total insured deposits based on the willingness received from the depositors concerned.
"The bank with its present financial position would be unable to pay its present depositors in full," it said, and added that public interest would be adversely affected if it is allowed to carry on its banking business any further.
Consequent to the cancellation of its licence, The City Co-operative Bank has been prohibited from conducting the business of ‘banking' which includes, among other things, acceptance of deposits and repayment of deposits.
(With inputs from PTI)
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