Taking a major action, the Reserve Bank has canceled the license of a co-operative bank. Announcing the cancellation of the licence, the Reserve Bank of India (RBI) on Wednesday said that the bank does not have enough capital and earning potential. For this reason the license of this bank has been canceled and now the bank has been barred from allowing repayment of deposits and new deposits.
The Reserve Bank on Wednesday canceled the license of The Mudhol Co-operative Bank Ltd., Bagalkot (Karnataka). It has also been barred from carrying out its ‘banking’ business, which, apart from facilities, has stopped the acceptance of deposits and payment of deposits. The RBI also said that the bank with its current financial position would be unable to make full payments to its existing depositors.
How can you withdraw your money?
According to the data released by the bank, the RBI said that over 99 per cent of the depositors will be entitled to get the full amount of their deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC). During this time every depositor will be entitled to collect deposit insurance claim amount up to Rs 5 lakh from DICGC. RBI said that DICGC has already paid Rs 16.69 crore out of the total Sum Assured after taking concurrence from the concerned depositors of the bank.
What is Insurance and Credit Guarantee Corporation (DICGC)
DICGC was started in the year 1978. It acts as a deposit insurance and loan guarantee for banks in India. It is a wholly owned subsidiary and operated by the Reserve Bank of India. It pays a sum insured of up to 5 lakhs to each of the depositors in case of bank collapse.
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Can’t use any features
After the ban by RBI, now this bank will not be able to give the benefit of any kind of banking facility to the customers. Also it will not be eligible for banking related business. At the same time, loan cannot be issued to any person or institution.