Bank Licence Cancelled: RBI cancels the license of yet another bank, know what happens to customer deposits
Suspense Crime, Digital Desk : The Reserve Bank of India (RBI) has cancelled the banking licence of Sri Mahalakshmi Urban Co-operative Credit Bank, which is based in Karnataka. The RBI has taken this action on the continuously deteriorating financial condition of the bank and its failure to maintain capital. The RBI said in a statement issued on Thursday that the Registrar of Co-operative Societies, Karnataka has been asked to issue an order for the winding up of the bank and the appointment of a liquidator. Why was the license canceled According to the Reserve Bank, the bank does not have adequate capital and the potential for future earnings. Also, it has not fulfilled some other provisions of the Banking Regulation Act, 1949. The RBI has also stated that the bank is not in a financial position to pay its customers back their full deposits. It said that in the public interest and with the public's continued trust it is in the interest of all to stop operating the bank further. After cancelling the license of Shri Mahalakshmi Urban Co-operative Credit Bank located in Gokak, Karnataka, banking operations are stopped immediately. It has been told that after the cancellation of the license, no new deposits will be accepted by this bank and no customer will get back his deposit. This is good for depositors According to the RBI, about 97.9 per cent of depositors will get their entire amount back on the liquidation of the bank. This payment will be done from the insurance available under the Deposit Insurance and Credit Guarantee Corporation (DICGC). It works as an insurer on the amount deposited in the banks up to a limit and saves the common depositor from damage. This is why the attention is on cooperative banks The Reserve Bank has started a major campaign to inspect cooperative banks for some time now. The RBI says it is necessary to prevent banks that are in poor financial condition.
