On January 28, 2021 The Reserve Bank of India (RBI)cancelled the licence of Shivam Sahakari Bank Ltd, a co-operative bank in Ichalkaranji, Kolhapur, Maharashtra. Following the cancellation of its license, the bank will stop to carry on the banking business, which includes accepting and repaying deposits as defined in Section 5(b) read with Section 56 of the Banking Regulation(BR) Act, 1949, with effect from the close of business on January 29, 2021.
- The bank can start the liquidation proceeding, with the cancellation of the license.
Note– RBI has also requested the commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra to issue an order to wind up the bank and appoint a liquidator for the bank.
Reason for License Cancellation
i.The bank has no adequate capital and earning prospects and does not comply with the provisions of section 11(1) and section 22 (3) (d) read with section 56 of the Banking Regulation Act, 1949.
ii.It failed to comply with the requirements of section 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;
iii.With its present financial position, it cannot pay the full deposit amount of its depositors.
iv.Public interest will be affected if the bank carries on its business.
Depositors will get a monetary ceiling of Rs 5 Lakhs
i.During the liquidation, every depositor is eligible to get the deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5 lakhs from the Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of the DICGC Act, 1961.
ii.Over 99% of the depositors of the bank are fully insured by DICGC.
Recent License Cancellation of RBI
Recently, RBI cancelled the license of Vasantdada Nagari Sahakari Bank, Osmanabad (Maharashtra).
Recent Related News:
On May 3, 2020, After the closure of Punjab and Maharashtra Co-operative (PMC) Bank, the Reserve Bank of India (RBI) cancelled the license granted to the 105-year-old CKP Co-operative Bank Ltd located in Mumbai (Maharashtra).
About Reserve Bank of India (RBI):
Established – 1st April, 1935
Headquarters– Mumbai, Maharashtra
Governor– Shaktikanta Das
Deputy Governors– 4 (Bibhu Prasad Kanungo, Mahesh Kumar Jain, Michael Debabrata Patra, and M Rajeswar Rao)
About Deposit Insurance and Credit Guarantee Corporation (DICGC):
i.It is a wholly owned subsidiary of RBI.
ii.It was established by merging Credit Guarantee Corporation of India Ltd. (CGCI) and Deposit Insurance Corporation (DIC).
Established– July 15, 1978
Chairman– Dr. M.D. Patra(Deputy Governor of RBI)
Headquarters– Mumbai, Maharashtra
