The Reserve Bank Of India declared that they have scrapped the licence of Karad Janata Sahakari Bank Ltd in Maharashtra as it does not have adequate capital and earning prospects.
On the basis of Deposit Insurance and Credit Guarantee Corporation (DICGC), more than 99% of the depositors of the bank will get full payment of their deposits, the RBI said in a statement.
With the cancellation of licence and beginning of liquidation proceedings, the process of paying the depositors of Karad Janata Sahakari Bank will be set in motion.
On liquidation, every depositor is entitled to repayment of their deposits up to ₹ 5 lakh only from the DICGC. After the license cancellation from close of the business hour on December 7, the bank cannot work anymore, which includes taking deposits and repaying deposits.
The Commissioner for Cooperation and Registrar of Cooperative Societies in Maharashtra has been asked to issue an order for winding up the bank and appointing a liquidator.
The bank was dismantled on the basis of the Banking Regulation Act, 1949.
The RBI said the bank was under “all-inclusive directions” since November 7, 2017.
The RBI commented, “The continuance of the bank is prejudicial to the interests of its depositors.” Hence, put the bank in a position where they will be unable to pay its depositors in full.
The RBI said, “Public interest would be adversely affected if the bank is allowed to carry on its banking business any further.”