The Reserve Bank of India has cancelled the license of Maharashtra's Laxmi Co-operative Bank Limited. The bank is now unable to carry on banking business with effect on September 22. The bank regulators have asked the commissioner for cooperation and the registrar of cooperative societies, Maharashtra, to make an order to wind up the bank and appoint a liquidator for the bank.
The RBI said that the bank does not have enough capital and earning prospects. It does not comply with the provisions of Section 11 1 and Section 22 3 d, read with Section 56 of the Banking Regulation Act, 1949, it said in a statement.
The bank said the bank's continued existence is prejudicial to the interests of its depositors. The bank with its present financial position would be unable to pay its current depositors in full, and public interest would be adversely affected if the bank is allowed to carry on its banking business any further, it added.
After the cancellation of the licence, the co-operative bank is now forbidden from conducting business of banking, which includes acceptance of deposits and repayment of deposits with immediate effect.
It said that every depositor would be entitled to receive deposit insurance claim amount of their deposits up to a monetary ceiling of Rs 5,00, 000 rupees five lakh only from Deposit Insurance and Credit Guarantee Corporation DICGC subject to the provisions of the 1961 DICGC Act.
According to the data submitted by the bank, 99 per cent of the depositors are entitled to receive the full amount of their deposits from the DICGC.
The provision of Section 18 A of the Section 18 A of the DICGC Act, 1961, was applied to the willingness of the depositors of the bank, as the DICGC had already paid Rs 193.68 crore of the total insured deposits on September 13, 2022.