110-year-old Pune-based bank shuts down. What happens to fixed deposit, RD of customers
1 min read . Updated: 22 Sep 2022, 01:36 PM IST
Premium- RBI has cancelled the licence of Pune-based bank because the bank does not have adequate capital and earning prospects
The Reserve Bank of India (RBI) had last month cancelled the licence of Pune-based Rupee Co-operative Bank Ltd. The central bank's direction will come into effect from today. "Consequently, the bank will cease to carry on banking business, with effect from September 22, 2022," RBI said on August 10.
Consequent to the cancellation of its licence, 'Rupee Co-operative Bank Ltd, Pune' stands prohibited from conducting the business of banking which includes, among other things, acceptance of deposits and repayment of deposits with effect from September 22, 2022, it said.
Why did RBI cancel the licence of Rupee Co-operative Bank, Pune
The licence has been cancelled because the bank does not have adequate capital and earning prospects and as such, it does not comply with certain provisions of the Banking Regulation Act, 1949.
It does not comply with the provisions of Section 11(1) and Section 22 (3) (d) with Section 56 of the Banking Regulation Act, 1949. The bank has failed to comply with the requirements of Sections 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 RBI added.
"The bank with its present financial position would be unable to pay its present depositors in full," the RBI said, and added the continuance of the bank is prejudicial to the interests of its depositors.
What will happen to depositors money
As per the data submitted by the cooperative bank, more than 99 per cent of the depositors are entitled to receive full amount of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC). As of May 18, 2022, DICGC has already paid ₹700.44 crore of the total insured deposits.
On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to ₹5 lakh from DICGC.
