The Reserve Bank of India (RBI) has cancelled the licence of the Maharashtra-based Shivam Sahakari Bank. The reason cited the absence of adequate capital and earning prospects as the reason behind the cancellation.
"Consequently, the bank ceases to carry on banking business, with effect from the close of business on January 29, 2021," the central bank said in a statement.
As per the data submitted by the Kolhapur-based bank, more than 99 per cent of the depositors are fully insured by Deposit Insurance and Credit Guarantee Corporation (DICGC).
"On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5,00,000 from the DICGC...," the central bank said.
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, it added.
Giving details, the RBI said the co-operative bank does not have adequate capital and earning prospects, and 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," RBI said, and added public interest would be adversely affected if the bank is allowed to carry on its banking business any further.
With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of Shivam Sahakari Bank as per the DICGC Act, 1961 will be set in motion.
(With PTI Inputs)
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