RBI Cancels License of Banaras Mercantile Cooperative Bank Due to this Reason…
RBI Cancels License of Banaras Mercantile Cooperative Bank Due to this Reason…
RBI revokes bank’s license for inadequate capital and earnings; depositors to receive up to Rs 5 lakh insurance from DICGC.
The Reserve Bank of India (RBI) has revoked the license of Banaras Mercantile Cooperative Bank, Varanasi, due to its worsening financial condition. This means the bank’s operations are halted from the close of business on July 4, 2024.
RBI stated that the Banaras Mercantile Cooperative Bank does not have adequate capital. Also, earning prospects have failed to comply with the requirements of the Banking Regulation Act. “Due to its current financial position, the bank will be unable to make full payment to its depositors,” the RBI emphasized.
On liquidation, every depositor is entitled to receive a deposit insurance claim amount of their deposits up to a monetary ceiling of Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC). According to the data submitted by the bank, 99.98% of the depositors are entitled to receive the full amount of their deposits from DICGC. As of April 30, 2024, the DICGC has already paid Rs 4.25 crore of the total insured deposits based on the claims received from the concerned depositors.
Following the license cancellation, the Cooperative Commissioner and Registrar of Cooperative Societies of Uttar Pradesh have been asked to issue an order to close the bank and appoint a liquidator.
RBI noted that the continuation of the bank is not in the best interest of its depositors due to its lack of sufficient capital and earning prospects.
