RBI Cancels License Of This Bank In Maharashtra; Only These Customers Will Get 100% Money Back
In a sweeping development, Reserve Bank of India has immediately cancelled the license of one major Maharastra Bank.
Although RBI has assured that 99% of the depositors will get their money back, apprehnesions exist all around.
What was the main reason for canceling the banking license?
Keep reading to find out more..
RBI Cancels Banking License Of Karad Janata Sahakari Bank Ltd
RBI has issued a notification, stating that the banking license of Karad Janata Sahakari Bank Ltd has been suspended with immediate effect.
The suspension has been imposed under section 22(3) (a), 22 (3) (b), 22(3)(c), 22(3) (d) and 22(3)(e) read with section 56 of the Banking Regulation Act, 1949.
In thier notification, RBI stated, The Reserve Bank of India (RBI) has, vide order dated December 7, 2020 cancelled the licence of The Karad Janata Sahakari Bank Ltd., Karad, Maharashtra to carry on banking business, with effect from from the close of business on December 7, 2020.”
As per reports, the bank was already under “All Inclusive Directions” since last month.
RBI has instructed The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra to issue an order for the same, and appoint an official liquidator for the bank.
Why RBI Took This Decision
As per the RBI notification, Karad Janata Sahakari Bank Ltd was unable to maintain the minimum cash which is required for every registered cooperative bank in order to operate.
And this was going on since long, and there was no visible improvement in the situation.
RBI said, “The bank does not have adequate capital and earning prospects. 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.”
Will Depositors Get Their Money?
Now, this is a tricky question.
Although RBI has assured that 99% of the depositors will get their money back, apprehensions exist for the same.
RB has said that as per Deposit Insurance and Credit Guarantee Corporation (DICGC), every depositor is liable to get Rs 5 lakh for their deposits.
But what about those depositors who have more than Rs 5 lakh in their accounts?
We will keep you updated as more details come in.