The Reserve Bank of India (RBI) has canceled the license of Kolhapur-based Shankarrao Pujari Nutan Nagari Sahakari Bank Limited. The Maharashtra State Commissioner of Co-operative and Registered Co-operative Societies has also been asked to issue an order for liquidation of the bank and appoint a liquidator for the bank.
According to the RBI, the banking license was canceled because the bank did not have adequate capital and profit prospects and was not in compliance with Rule 11(1) and 22(3)(d) of Rule 56 of the Banking Ordinance. Regulations Act, 1949.
The bank also failed to comply with various other provisions of the Banking Regulation Act, 1949.
“The continued existence of the bank is detrimental to the interests of depositors. In the current financial position, the bank will not be able to make full payments to its existing depositors; if the bank is allowed to carry out further banking operations, the public interest will be adversely affected.” The Reserve Bank of India said stated in a press release.
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As a result of the cancellation of the license, Shankarrao Pujari Nutan Nagari Sahakari Bank was prohibited from carrying on the business of “banking” which includes the acceptance of deposits and the repayment of deposits as defined in Section 5(b) (read with Section 5(b)) of the Banking Act, 1949 Article 56 of the Industry Supervision Law shall take effect immediately.
On liquidation, each depositor is entitled to receive deposit insurance claim amount up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC) under the provisions of the DICGC Act, 1961.
According to data submitted by the bank, 99.85% of depositors are entitled to receive their full deposit from DICGC. As on July 24, 2023, DICGC has disbursed Rs 4,160 crore of the total insured deposits in accordance with the wishes of the relevant depositors of the bank under Section 18A of the DICGC Act, 1961.