The Reserve Bank of India (RBI) announced on Tuesday that it has cancelled the license of Karad Janata Sahakari Bank Ltd in Maharashtra since it does not possess adequate capital and earning prospects. More than 99% depositors of the bank will get their deposits with the Deposit Insurance and Credit Guarantee Corporation (DICGC), the regulator said.
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As the license has been cancelled now, the RBI will soon announce liquidation proceedings while the process of getting the depositors’ money back will begin shortly after. The RBI has said that upon liquidation, each depositor will be entitled to a repayment of their deposits up to ₹5 lakh just from the DICGC.
This means that Karad Janata Sahakari Bank Ltd can no longer function, while the cancellation of the license means they cannot take or repay deposits either. Meanwhile, the Commissioner for Cooperation and Registrar of Cooperative Societies in Maharashtra is soon expected to issue an order to appoint a liquidator and finalize the closure of the bank.
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The RBI also pointed out that the bank had been placed under “all inclusive directions” since November 7, 2017, while adding that the “continuance of the bank is prejudicial to the interests of its depositors.”
The RBI found that Karad Janata Sahakari Bank Ltd does not comply with the provisions of the Banking Regulation Act, 1949. “Public interest would be adversely affected if the bank is allowed to carry on its banking business any further,” the RBI added.
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