The Reserve Bank of India on Tuesday, 8 December, said it has cancelled the licence of Karad Janata Sahakari Bank Ltd in Maharashtra, citing inadequate capital and earning prospects as the reason, NDTV reported.
Under the Banking Regulation Act, 1949, these are provisions that need to be complied with.
The RBI said in a statement that “the continuance of the bank is prejudicial to the interests of its depositors,” adding, that the bank’s running in its present position would end in a loss for its depositors.
It also added that more than 99 percent on its depositors will get full payment of their deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as the cancellation of licence and the process of liquidation begins.
Every depositor will be entitled to repayment of their deposits up to ₹5 lakh only from the DICGC upon liquidation.
The bank ceased all its work, including taking deposits and repaying deposits from 7 December, at the end of business hour.
The RBI said the bank was under “all inclusive directions” since 7 November 2017.
The Commissioner for Cooperation and Registrar of Cooperative Societies in Maharashtra has been urged to issue an order appointing a liquidator and dissolving the bank.
(With inputs from NDTV)
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