The Reserve Bank of India announced that it has cancelled the licence of Karad Janata Sahakari Bank Ltd in Maharashtra as the lender lacks adequate capital and earning prospects.
Over 99 percent of the depositors of the bank will be getting full payment of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC), said the RBI in its official statement.
After the cancellation of the license and starting of liquidation proceedings, the process of final payments to the depositors of Karad Janata Sahakari Bank will begin.
On liquidation, every depositor of the bank will be entitled for repayment of their deposits up to Rs 5 lakh only from the DICGC.
After cancellation of licence by the RBI from close of business hour on December 7, the bank does have the authority to function anymore and no longer has the authority of taking deposits and repaying deposits.
The RBI stated that the bank was under “all inclusive directions” since November 7, 2017. The Commissioner for Cooperation and Registrar of Cooperative Societies in Maharashtra has been directed to generate an order for closing the banks operations and appointing a liquidator.
The RBI said it revoked the licence of the bank as it “does not have adequate capital and earning prospects”. It is because The bank does not adhere with the provisions of the Banking Regulation Act, 1949.
“The continuance of the bank is prejudicial to the interests of its depositors,” said the regulator.
The central bank said, “Public interest would be adversely affected if the bank is allowed to carry on its banking business any further.”