The Reserve Bank of India (RBI) has cancelled the license of Bhagyodaya Friends Urban Co-operative Bank Limited, Maharashtra in April 2021, as the bank doesn’t have adequate capital to fund its depositors in full and as it did not comply with the various provisions of the Banking Regulation Act, 1949.
Restriction: After the license has been cancelled, the bank is prohibited from acceptance of deposits and repayment of deposits.
Paying the depositors (as per the provisions of the DICGC Act, 1961):
- More than 98 per cent of the depositors of the Bhagyodaya Friends UCB will receive the full amounts of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC).
- After Liquidation, every depositor would receive a deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5 lakh from the DICGC.
What is Liquidation?
It is the process of converting a company’s assets into cash and using those funds to repay, as much as possible, the company’s debts.
Recent Related News:
On January 28, 2021, RBI cancelled the license of Shivam Sahakari Bank Ltd, a co-operative bank in Ichalkaranji, Kolhapur, and Maharashtra. The bank will stop carrying on the banking business, which includes accepting and repaying deposits.
About Reserve Bank of India (RBI):
Establishment – 1st April 1935
Headquarters – Mumbai, Maharashtra
Governor – Shaktikanta Das
Deputy Governors – Mahesh Kumar Jain, Michael Debabrata Patra, and M Rajeshwar Rao