The Reserve Bank of India (RBI) on Wednesday said it has cancelled the licence of Tezpur-based Mahabhairab Sahakari Urban Bank due to its deteriorating financial position. After the cancellation of the licence, the cooperative bank will cease banking business from the close of business on July 24, 2024. According to Bhasha news, in a statement, the Reserve Bank of India said that the Registrar of Cooperative Societies, Assam has also been requested to issue an order to close the bank and appoint a liquidator.
The bank does not have sufficient capital and earning potential
According to the news, citing the reason for cancelling the license, RBI said that the lender does not have sufficient capital and earning prospects. The bank said that due to its current financial position, the bank will be unable to make full payment to its existing depositors. It also said that the bank’s continuation is detrimental to the interests of its depositors. Upon liquidation, every depositor will be entitled to receive insurance claim amount on his deposits up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
99.8 percent depositors are entitled to get the full deposit amount
RBI said that as per the data submitted by the cooperative bank, about 99.8 percent of the depositors are entitled to receive the full amount of their deposits from DICGC. As of June 13, 2024, DICGC has already paid Rs 20.03 crore out of the total insured deposits. RBI keeps reviewing cooperative banks from time to time. Earlier also, the central bank has canceled the licenses of many cooperative banks due to their poor financial condition or regulatory violations. Due to cancellation of license of Tezpur-based Mahabharab Sahakari Urban Bank, its customers will immediately face problems.
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