BackRBI suspends license of Millath Co-operative Bank due to inadequate capital
The Reserve Bank of India (RBI) announced on June 18 that Millath Co-operative Bank Ltd., Davangere, Karnataka, had its license suspended leading to a shortage of capital.
PremiumThe Reserve Bank of India (RBI) announced on June 18 that Millath Co-operative Bank Ltd., Davangere, Karnataka, had its license suspended leading to a shortage of capital. As a result, the bank will cease to conduct banking operations on June 18, 2022, at the close of business. “The Registrar of Cooperative Societies, Karnataka has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank," RBI has said in a press release.
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, says RBI.
The bank's licence has been terminated by the Reserve Bank because it lacked appropriate capital and earning potential, according to the RBI, which added that the bank's continued existence would be detrimental to its depositors' interests. 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, said RBI in its official statement.
RBI has further added that on liquidation, 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.
As per the data submitted by the bank, all the depositors will receive full amount of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC). As on May 18, 2022, DICGC has already paid ₹10.38 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961 based on the willingness received from the concerned depositors of the bank, RBI has stated in its press note.
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