1 min read.Updated: 13 Aug 2021, 09:05 PM ISTLivemint
Consequently, the Karnala Nagari Sahakari Bank of Maharashtra ceases to carry on banking business, with effect from the close of business on August 13, 2021, the RBI said
The Reserve Bank of India (RBI) has cancelled the licence of Karnala Nagari Sahakari Bank of Maharashtra. Consequently, the bank ceases to carry on banking business, with effect from the close of business on August 13, 2021, the RBI said in an official release.
The central bank further said, "The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank."
95% of the depositors will receive full amounts of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC), according to the data submitted by the bank.
On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of ₹5 lakh from the DICGC subject to the provisions of the DICGC Act, 1961, the RBI said.
The RBI has cancelled the licence of the bank as:
- 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.
- The bank has failed to comply with the requirements of 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;
- 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.
“Consequent to the cancellation of its licence, Karnala Nagari Sahakari Bank Ltd., Panvel (District - Raigad), Maharashtra is prohibited from conducting the business of ‘banking’ which includes acceptance of deposits and repayment of deposits as defined in Section 5(b) read with Section 56 of the Banking Regulation Act, 1949 with immediate effect," the RBI statement added.
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