The Reserve Bank of India (RBI) has canceled the license of another co-operative bank. Let us tell you that this is the fourth bank of this year on which RBI has taken action. The banking regulator has canceled the license of PEOPLE’S CO-OPERATIVE BANK LTD based in Kanpur, Uttar Pradesh. The central bank has taken this step due to the poor financial condition of the bank and no earning prospects. RBI has closed the business of this bank with effect from March 21, 2022.
Decision taken in the interest of customers
According to RBI, if the bank is allowed to continue its business even after the financial condition is not good, then it will not be in public interest. “The Commissioner of Cooperatives and the Registrar of Cooperative Societies, Uttar Pradesh have also been requested to issue an order for winding up the bank and appoint a liquidator for the lender,” RBI said.
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Know the whole matter
It was found in the investigation that despite being registered in the urban cooperative sector, loans were disbursed in rural areas. No guarantee was taken. More than 80 percent of the loans were given in the auto section. KYC not completed. Loans were distributed to thousands of bogus people. This was the reason that the vehicles became junk and became NPA without installment. Now even ten lakhs will not be available from the sale of those vehicles.
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What will happen to customers’ money?
Explain that on liquidation, 99% of the account holders will get their deposited capital under the rule of Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961. Under this rule, depositors will be given an amount up to Rs 5 lakh. Finance Minister Nirmala Sitharaman had proposed amendments to the DICGC Act in the 2021 budget. Its purpose was that if a bank temporarily fails to meet its obligations, depositors can easily and timely get their deposits up to Rs 5 lakh.