NEW DELHI: The Reserve Bank of India (RBI) on Tuesday cancelled the license of Karad Janata
Sahakari Bank and asked the Registrar of Cooperative Societies, Maharashtra to wind it up as it “does not have adequate capital and earning prospects.”
According to the banking regulator, the bank with its present financial position would be unable to pay its present depositors in full and public interest would be adversely affected if the bank is allowed to carry on its banking business any further.
On liquidation, all depositors are entitled to repayment of their deposits up to a monetary ceiling of Rs 5 lakh only from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per usual terms and conditions.
“More than 99 per cent of the depositors of the bank will get full payment of their deposits from DICGC,” RBI said in a statement. The bank was under All Inclusive Directions since November 07, 2017. The imposition of All-inclusive Directions on an Urban Co-operative Bank, restricts the bank from discharging its liabilities except as permitted by RBI.
“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 in its order. With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of The Karad Janata Sahakari Bank will be set in motion.
The Reserve Bank has been cracking down on Urban cooperative banks ever since the fraud hit multi-state PMC bank came under its radar. While a rescue operation for PMC bank was mounted by the banking regulator, it has been shutting smaller unviable banks or taking regulatory actions ever since.
Earlier in April this year, another Maharashtra-based cooperative bank — CKP Co-operative Bank — was also shut down as its financial position was “highly adverse and unsustainable,” and in the absence of any concrete revival plan.