The Reserve Bank of India (RBI) on Wednesday cancelled the licence of Rupee Co-operative Bank following an order from the Bombay High Court. “In compliance to the Hon’ble High Court of Bombay order… the order shall become effective after six weeks from today,” the central bank said in a press release.
The bank will have to cease to carry on banking business with effect from September 22. The RBI has also asked the commissioner for cooperation and registrar of cooperative societies to issue an order for winding up the bank and appoint a liquidator.
The RBI cancelled the licence as the lender does not have adequate capital and earning prospects, it failed to comply with banking regulations, the continuance of the bank is prejudicial to the interests of its depositors as it is not in a position to pay them and public interest will be adversely affected if the bank is allowed to carry on its business any further.
On liquidation, every depositor would be entitled to receive deposit insurance claim amount of up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation. As on May 18, the DICGC has paid Rs 700 crore of total insured deposits to depositors of the bank.