Goemkarponn desk
NEW DELHI: The Reserve Bank of India (RBI) has cancelled the licence of the Madgaum Urban Co-operative Bank Limited in Goa. Consequently, the bank ceases to carry on banking business, with effect from the close of business on July 29, 2021, the RBI said in a release.
The office of Registrar of Cooperative Societies, Goa has been requested to issue an order for winding up the bank and appoint a liquidator for it, the RBI said.
This is the latest instance of the central bank clamping down on poorly run cooperative banks. The central bank has cancelled the licences of at least half a dozen co-operative banks in the recent past citing institutional failure and has initiated punitive actions on many others.
With the cancellation of licence 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.
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.
