RBI canceled the license of 2 banks, transactions stopped from today

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Cooperative Banks License: The Reserve Bank of India (RBI) is constantly taking strict action against banks for not following the rules. After imposing penalties on HDFC and HSBC Bank in the past, the RBI has now canceled the licenses of two co-operative banks operating in Maharashtra and Karnataka. Also, the two banks have been asked not to carry on any banking business after the cancellation of license on July 5, 2023.

No deposit of any kind will be accepted

The RBI informed that the banking licenses of Buldhana-based Malkapur Urban Co-operative Bank Limited and Bangalore-based Sushruti Souharda Co-operative Bank Regular (Sushruti Souharda Co-operative Bank Niamita) have been cancelled. According to the statement, both banks will not be able to accept any kind of deposits and will not be able to give deposits to customers after the closure of business.

What will happen to the depositors?
This step has been taken by the central bank in view of the lack of adequate capital and earning capacity of both the cooperative banks. The Reserve Bank has asked the Commissioner of Cooperatives and Registrar of Cooperative Societies, Maharashtra to issue an order to wind up the bank and appoint a liquidator for the bank. The Reserve Bank said that every depositor will be entitled to receive the deposit insurance claim amount of his deposit up to a limit of Rs five lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

According to data presented by the bank, 97.60% of depositors are entitled to receive the full amount of their deposits from DICGC. The RBI said that if Malakpur Urban Cooperative Bank is allowed to do banking business, it will affect public interest. In the near future, the bank will be unable to pay its depositors in full with the current financial position.

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