The Reserve Bank of India (RBI) on Wednesday cancelled the licence of the Rupee Co-operative Bank, saying the Pune-based lender does not have adequate capital, earning prospects and it does not comply with regulations.
The order will be effective after six weeks from September 22.
The RBI in its press release said, “Rupee bank stands prohibited from conducting the business of ‘banking’ which includes, among other things, acceptance of deposits and repayment of deposits as defined in section 5(b) read with section 56 of Banking Regulation Act 1949 with effect from September 22, 2022.”
Depositors, meanwhile, are unhappy with the decision. Around 4,500 members have deposits above ₹5 lakh, an upper cap set under Deposit Insurance and Credit Guarantee Corporation (DICGC) for repayment.
Bhalchandra Kulkarni, a member of the depositors’ association, called the RBI order unfortunate and incomprehensible. “In the last 8 years, RBI had extended the administrator period about 30 times. Meanwhile, many depositors died by suicide, many lost their businesses, and many became homeless. I can’t get my hard-earned money back now,” he said.
“The investment amount of Rs800 crores is lying with the Rupee Bank. This investment will now be withdrawn by the Deposit Insurance Corporation, so what has the government (Reserve Bank) paid to the depositors? This is the question now,” said Kulkarni.
{{/usCountry}}“The investment amount of Rs800 crores is lying with the Rupee Bank. This investment will now be withdrawn by the Deposit Insurance Corporation, so what has the government (Reserve Bank) paid to the depositors? This is the question now,” said Kulkarni.
{{/usCountry}}According to RBI further liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of ₹5,00,000- (Rupees five lakh only) from Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of DICGC Act, 1961.
As per the data submitted by the bank, more than 99% of the depositors are entitled to receive the full amount of their deposits from DICGC, the RBI said.
“The Reserve Bank has committed contempt of court by cancelling the license as one of our writ petitions is pending with the court. This action of RBI is illegal,” said Kulkarni.
According to another depositor Sanjay Deshpande, they had met Union Finance Minister Nirmala Sitharaman, and Minister of State for Finance Bhagwat Karad in person and made several requests to the Reserve Bank, but to no avail. “Even now we have got a big investor, who can take over the bank, but RBI has let us down on all efforts by revoking the licence,” said Deshpande.
The banking regulatory body said the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has been requested to issue an order for winding up the bank and appoint a liquidator for the bank.
The Reserve Bank said the banking licence of the Rupee Co-operative Bank was cancelled as the bank does not have adequate capital and earning prospects. It does not comply with the provisions of Section 11(1) and Section 22 (3) (d) with Section 56 of the Banking Regulation Act, 1949.
The bank has failed to comply with the requirements of Sections 22(3) (a), 22 (3) (b), 22(3)(c), 22(3) (d) and 22(3)(e) read with Section 56 of the Banking Regulation Act, 1949, the RBI added.
(With inputs from Agencies)