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RBI cancels THIS bank's license; know what will happen to depositors' money
More than 99 per cent of the depositors will get full payment of their deposits, the Reserve Bank of India said.
Updated : Dec 09, 2020, 05:26 PM IST
 "Karad Janata Sahakari Bank Ltd RBI")
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The Reserve Bank of India (RBI) cancelled the licence of the Karad Janata Sahakari Bank Ltd, Karad, Maharashtra because “the bank does not have adequate capital and earning prospects”.
The RBI said the Karad Janata Sahakari Bank was under "all inclusive directions" since November 7, 2017. The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank. The RBI said it cancelled the licence of the bank as it "does not have adequate capital and earning prospects". As such, it does not comply with the relevant provisions of the Banking Regulation Act, 1949.
What happens to depositors' money?
-More than 99 per cent of the depositors will get full payment of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC), the Reserve Bank of India said in a statement.
-With the cancellation of the licence and commencement of liquidation proceedings, the process of paying the depositors of The Karad Janata Sahakari Bank will be set in motion.
-On liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of Rs 5 lakh only from the DICGC as per usual terms and conditions.
Prohibited from banking business:
- Consequent to the cancellation of its licence from the close of business on December 7, the bank has been prohibited from conducting the business of 'banking' which includes acceptance of deposits and repayment of deposits with immediate effect.
-"The continuance of the bank is prejudicial to the interests of its depositors," RBI said and added the bank with its present financial position would be unable to pay its present depositors in full.
