RBI cancels licence of Karad Janata Sahakari Bank

RBI said the licence of Janata Sahakari Bank was cancelled 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.

The Reserve Bank of India (RBI) on Tuesday said it has cancelled the licence of Karad Janata Sahakari Bank Ltd, Karad, Maharashtra, as it does not have adequate capital and earning prospects.

RBI on Tuesday said it has cancelled the licence of Karad Janata Sahakari Bank Ltd, Karad, Maharashtra, as it does not have adequate capital and earning prospects (REUTERS)

More than 99 per cent of the depositors of the bank will get full payment of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC), the Reserve Bank said in a statement.

With the cancellation of licence and commencement 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 his/her deposits up to a monetary ceiling of ₹5 lakh only from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per usual terms and conditions. Consequent to the cancellation of its licence from close of business on December 7, the bank has been prohibited from conducting the business of ‘banking’ which includes acceptance of deposits and repayment of deposits with immediate effect.

RBI said the licence of the bank was cancelled 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.

“The continuance of the bank is prejudicial to the interests of its depositors,” it said, and added the bank with its present financial position would be unable to pay its present depositors in full. Also, public interest would be adversely affected if the bank is allowed to carry on its banking business any further.