The Reserve Bank of India (RBI) on May 31 cancelled the licence of Shivajirao Bhosale Sahakari Bank in Maharashtra citing poor finances of the co-operative bank. Consequently, the bank ceases to carry on banking business, with effect from the close of business on May 31, 2021, the RB said in a release.
As per the data submitted by the bank, more than 98 percent of the depositors will receive full amounts of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC), the RBI said.
The 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.
The Reserve Bank cancelled the licence of the bank as the lender does not have adequate capital and earning prospects. The continuance of the bank is prejudicial to the interests of its depositors, the RBI said. Also, the bank with its present financial position would be unable to pay its present depositors in full , the RBI said, adding, public interest would be adversely affected if the bank is allowed to carry on its banking business any further.
Consequent to the cancellation, the bank is prohibited from the business of ‘banking’ which includes acceptance of deposits and repayment of deposits, the RBI said.
With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors will be set in motion.On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs five lakh from the DICGC subject to the provisions of the DICGC Act, 1961, the RBI said.