RBI cancels Mahalaxmi Cooperative Bank Dharwad’s banking licence, allows to operate as NBFC

The Reserve Bank of India (RBI) on Tuesday directed Karnataka-based Mahalaxmi Cooperative Bank, Dharwad to function only as a non-banking institution.

Accordingly, the RBI cancelled the banking licence dated March 23, 1994 granted to the Mahalaxmi Cooperative Bank Dharwad, the banking regulator said. The cancellation of licence is with effect from the close of business on June 27, 2023, the central bank said in a release.

“This makes it obligatory on the part of Mahalaxmi Cooperative Bank Ltd., Dharwad, Karnataka to stop conducting the business of ‘banking’ within the meaning of section 5(b) of the Act ibid, including acceptance of deposits from non-members with immediate effect,” the Reserve Bank added.

The central bank further said, Mahalaxmi Cooperative Bank Ltd., Dharwad, Karnataka will ensure to repay unpaid and unclaimed deposits of non-members held by it, whenever demanded, even after being notified as non-banking Institution.

In April 2023, the central bank cancelled the banking licence of Adoor Co-operative Urban Bank and allowed it to operate only as NBFC.

The crisis-ridden cooperative banks continue to face the wrath of the RBI, which cancelled the licence of nine lenders in FY 2023.

On Monday, the RBI imposed penalties on seven cooperative banks for contravention of/non-adherence with the certain norms issued by the central bank for the same.

These cooperative banks were —Textile Traders Co-operative Bank Ltd, Ujjain Nagarik Sahakari Bank Maryadit, Panihati Co-operative Bank, The Berhampur Co-operative Urban Bank, Solapur Siddheshwar Sahakari Bank, Uttar Pradesh Co-operative Bank Limited and the Uttarpara Co-operative Bank, the central bank said in statements. 

The central bank had imposed a penalty of ₹28 lakhs on Uttar Pradesh Co-operative Bank Limited. A monetary penalty of ₹4.50 lakhs was imposed on Textile Traders Co-operative Bank Ltd. Further, the central bank imposed ₹2.50 lakh penalty each on Panihati Co-operative Bank and The Uttarpara Co-operative Bank. Solapur Siddheshwar Sahakari Bank  faced a penalty of ₹1.50 lakh. Similarly, ₹1 lakh each penalty was imposed on Ujjain Nagarik Sahakari Bank Maryadit and The Berhampur Co-operative Urban Bank.