Big action by RBI! This bank's licence cancelled - Here is why| Do you have account in it?

With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors will be set in motion.

The Commissioner for Cooperation and Registrar of Cooperative Societies (RCS), Maharashtra has also been requested to issue an order for winding up the bank and appointing a liquidator for the bank. Reuters pic.

Taking a major action, the Reserve Bank of India (RBI) has cancelled the licence of Vasantdada Nagari Sahakari Bank of Osmanabad in Maharashtra. Giving a confirmation, the RBI on Monday said it has cancelled the licence of Vasantdada Nagari Sahakari Bank, Osmanabad, Maharashtra as the bank would be unable to pay its present depositors in full in its current financial position.

With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of Vasantdada Nagari Sahakari Bank will be set in motion.

On liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of Rs 5,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC), the Reserve Bank of India (RBI) said.

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"More than 99 per cent of the depositors of the bank will get full repayment of their deposits from DICGC," it said. The licence stands cancelled from the close of business on Monday and the bank cannot carry on banking business.

Giving details, it said continuance of Vasantdada Nagari Sahakari 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," the RBI said.

Earlier in the month of December, the RBI had cancelled the licence of The Karad Janata Sahakari Bank Ltd, Karad, Maharashtra. The reason cited by RBI behind cancellation is 'the bank does not have adequate capital and earning prospects'. Giving details, the RBI said the bank was under "all inclusive directions" since November 07, 2017. 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 it cancelled the licence of the bank as it "does not have adequate capital and earning prospects". As such, it does not comply with the relevant provisions of the Banking Regulation Act, 1949.

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