Nagpur: The Reserve Bank of India (RBI) has cancelled the banking licence of yet another urban cooperative in the region. On Wednesday, the RBI issued an order to strike down the licence of The Malkapur Urban Cooperative Bank. The bank was headed by former BJP MLA Chainsukh Sancheti.
With this, the Commissioner of Cooperatives will have to initiate winding up proceedings of the bank by appointing an official liquidator.
Today’s Rate
Thursday 21 Nov. 2024
The first strictures against the bank were passed on November 26, 2021, when RBI had imposed a limit of Rs 10,000 on withdrawals from the urban cooperative. However, things could not improve in the last two years and the restrictions on withdrawals were repeatedly extended before the licence was cancelled.
The bank’s NPAs had touched 20% and it had a low capital adequacy of 2.2%. The cooperative has 28 branches, most of which are in Aurangabad district.
Citing the reasons for striking down the licence, the RBI order says that the bank does not have adequate capital and earning prospects. The bank is not in a position to pay its depositors their amount in full and public interest would be adversely affected if it is allowed to carry on the business, the order stated.
However, on the brighter side, more than 97% of the bank’s depositors are entitled to get the full amount back. This is because their amounts are within Rs 5 lakh which is fully covered by the Deposit Insurance and Credit Guarantee Corporation (DIGC). Earlier, the DICGC had an upper limit of Rs 1 lakh.
Before this, urban cooperatives like Nagpur Mahila Bank, Samata Bank and Parmatma Ek Sevak Bank have been liquidated after their banking licence was cancelled.
