RBI canceled bank license: Adoor Co-operative Urban Bank of Kerala has had its banking license canceled by the Reserve Bank of India, as per an official notification. Although the license has been canceled, the bank can operate as a Non-Banking Finance Company (NBFC). The order to ban business activity was effective immediately from April 24, 2023. The bank received its banking license on January 3, 1987, under the Banking Regulation Act, and its license has now been revoked by the RBI.
The crucial question now is what will happen to the customers' money after the license has been canceled. Depositors are insured up to Rs 5 lakh through the Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the Reserve Bank that provides financial security to customers. Customers who have deposited less than Rs 5 lakh in the bank will get their entire money back. However, those who have deposited more than Rs 5 lakh will not receive the full refund.
In addition to the cancellation of the license, the RBI has imposed a fine of Rs 44 lakh on four co-operative banks for violating rules. These banks include The Tamil Nadu State Apex Co-operative Bank, Bombay Mercantile Co-operative Bank, Janata Sahakari Bank Pune, and Baran Nagrik Sahakari Bank Rajasthan. The fines have been imposed for their failure to comply with regulations.
It is important to note that while the Adoor Co-operative Urban Bank can continue to function as an NBFC, it will no longer be able to conduct banking activities.
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