Both the coop banks do not have adequate capital and earning prospects
FinTech BizNews Service
Mumbai, January 13, 2024: Reserve Bank of India has cancelled the license of
Shree Mahalaxmi Mercantile Co-operative Bank Ltd., Dabhoi, Gujarat. Reserve Bank
of India has also cancelled the licence of The Hiriyur Urban Co-operative Bank Ltd.,
Hiriyur, Karnataka. Both the coop banks do not comply with the provisions of Section
11(1) and Section 22 (3) (d) read with Section 56 of the Banking Regulation Act,
1949.
The Reserve Bank of India (RBI), vide order dated January 12, 2024, has cancelled
the license of “Shree Mahalaxmi Mercantile Co-operative Bank Ltd., Dabhoi”.
Consequently, the bank ceases to carry on banking business, with effect from the
close of business on January 12, 2024. Registrar of Cooperative Societies, Gujarat
has also been requested to issue an order for winding up the bank and appoint a
liquidator for the bank.
The Reserve Bank cancelled the license of the bank as:
The bank does not have adequate capital and earning prospects. As such, 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.
The bank has failed to comply with the requirements of Section 22(3)(a), 22 (3)(b),
22 (3)(c), 22 (3)(d) and 22 (3)(e) read with Section 56 of the Banking Regulation Act,
1949;
The continuance of the bank is prejudicial to the interests of its depositors;
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.
2. Consequent to the cancellation of its license “Shree Mahalaxmi Mercantile Co-
operative Bank Ltd., Dabhoi” is prohibited from conducting the business of ‘banking’
which includes acceptance of deposits and repayment of deposits as defined in
Section 5(b) read with Section 56 of the Banking Regulation Act, 1949 with
immediate effect.
3. On liquidation, every depositor would be entitled to receive deposit insurance
claim amount of his/her deposits up to a monetary ceiling of Rs5,00,000/- (Rupees
Five Lakh only) from the Deposit Insurance and Credit Guarantee Corporation
(DICGC) subject to the provisions of the DICGC Act, 1961. As per the data
submitted by the bank 99.36% of the depositors are entitled to receive full amount of
their deposits from DICGC. As on September 30, 2023, DICGC has sanctioned
Rs24.58 crore of the total insured deposits under the provisions of Section 18A of
the DICGC Act, 1961 based on the willingness received from the concerned
depositors of the bank.
The Reserve Bank of India (RBI), vide order dated January 12, 2024, has cancelled
the licence of “The Hiriyur Urban Co-operative Bank Ltd., Hiriyur”. Consequently, the
bank ceases to carry on banking business, with effect from the close of business on
January 12, 2024. The Registrar of Cooperative Societies, Karnataka has also been
requested to issue an order for winding up the bank and appoint a liquidator for the
bank.
The Reserve Bank cancelled the licence of the bank as:
i. The bank does not have adequate capital and earning prospects. As such, 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.
ii. The bank has failed to comply with the requirements of Sections 22(3)(a), 22
(3)(b), 22(3)(c), 22(3)(d) and 22(3)(e) read with Section 56 of the Banking Regulation
Act, 1949;
iii. The continuance of the bank is prejudicial to the interests of its depositors;
iv. The bank with its present financial position would be unable to pay its present
depositors in full; and
v. Public interest would be adversely affected if the bank is allowed to carry on
its banking business any further.
2. Consequent to the cancellation of its licence, “The Hiriyur Urban Co-operative
Bank Ltd., Hiriyur” is prohibited from conducting the business of ‘banking’ which
includes, among other things, acceptance of deposits and repayment of deposits as
defined in Section 5(b) read with Section 56 of the Banking Regulation Act, 1949
with immediate effect.
3. On liquidation, every depositor would be entitled to receive deposit insurance
claim amount of his/her deposits up to a monetary ceiling of Rs5,00,000/- (Rupees
five lakh only) from Deposit Insurance and Credit Guarantee Corporation (DICGC)
subject to the provisions of DICGC Act, 1961. As per the data submitted by the bank,
99.93% of the depositors are entitled to receive full amount of their deposits from
DICGC. As on September 30, 2023 DICGC has already paid Rs224.53 lakh of the
total insured deposits under the provisions of Section 18A of the DICGC Act, 1961
based on the willingness received from the concerned depositors of the bank.
