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The Reserve Bank of India on 22 September announced that it has cancelled Solapur-based The Laxmi Co-operative Bank Limited, citing the lender lacks adequate capital and earning prospects.

The bank ceases to carry on banking business, with effect from the close of business on September 22, 2022, the RBI said in a statement. Further more, the RBI requested Maharashtra's Commissioner for Cooperation and Registrar of Cooperative Societies to issue an order for winding up the bank and appoint a liquidator for the bank.

"Today, the Reserve Bank of India (RBI), vide order dated September 14, 2022, has cancelled the licence of “The Laxmi Co-operative Bank Limited, Solapur, Maharashtra". Consequently, the bank ceases to carry on banking business, with effect from the close of business on September 22, 2022," the RBI statement said.

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Mentioning the reasons for cancelling the licence, the RBI said the bank does not have adequate capital and earning prospects. It also cited the bank 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 that the bank with its present financial position would be unable to pay its present depositors in full and public interest would be adversely affected.

With this cancellation, The Laxmi Co-operative Bank Limited will not be able to from conducting the business of ‘banking’ which includes, among other things, acceptance of deposits and repayment of deposits.

However, to ensure customers' money are safe, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of 5,00,000 from Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of DICGC Act, 1961.

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