New Delhi [India]: The Reserve Bank of India on Thursday cancelled the licence of Maharashtra-based Laxmi Co-operative Bank on the basis of weak financials.
The central bank also mentioned that Laxmi Co-operative Bank consequently ceases to carry on banking business, with effect from Thursday.
Maharashtra’s commissioner for cooperation and registrar of cooperative societies has also been requested to issue an order for winding up the bank and to appoint a liquidator for the bank, the RBI said.
The central bank said it had cancelled the licence of Laxmi Co-operative Bank because the bank doesn’t have adequate capital and earning prospects, and added that the continuance of the bank is prejudicial to the interests of its depositors.
Laxmi Co-operative Bank in its current financial position would be unable to pay its present depositors in full, and public interest would be adversely affected if it is allowed to continue its business, it said.
On matters of liquidation, the RBI said every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5 lakh from Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to the provisions of DICGC Act, 1961.
According to data given by the bank, over 99 per cent of the depositors are entitled to receive the full amount of their deposits from DICGC.
As of September 13, the central bank said DICGC already paid Rs 193.68 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961.