Depositors having putting in above Rs 5 lakh in the urban co-operative bank will be hit. DICGC provides to depositors full deposit amount of up to Rs 5 lakh. As per RBI, more than 99% of the bank’s depositors are entitled to receive full amount of their deposits from DICGC.
The Reserve Bank of India (RBI) has cancelled the licence of Karnataka-based Deccan Urban Co-operative Bank as the lender does not have adequate capital and earning prospects.
Depositors having putting in above Rs 5 lakh in the urban co-operative bank will be hit. The Deposit Insurance and Credit Guarantee Corporation (DICGC) provides to depositors the full deposit amount of up to Rs 5 lakh.
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 central bank said in a release.
The co-operative bank ceases to carry on banking business, with effect from the close of business on Thursday.
The RBI has also directed the state’s Commissioner for Cooperation and Registrar of Cooperative Societies to issue an order for winding up the bank and to appoint a liquidator for the bank.
On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to Rs 5 lakh DICGC.
As on 6 August 2022, DICGC has already paid Rs 13.07 crore of the total insured deposits.
"The bank does not have adequate capital and earning prospects," the RBI said while announcing the cancellation of the licence.
It also said the Vijayapur-based bank with its present financial position would be unable to pay its present depositors in full.
DICGC was set up in July 1978 as a special division of RBI, providing insurance for deposits and guarantees over credit facilities. It issues insurance to all bank deposits including savings, fixed deposits current, and recurring deposits with a limit up to Rs 5 lakh.
In a separate release, the RBI said it has imposed a penalty of Rs 5,93,000 on Obopay Mobile Technology India Private Limited for non-compliance with certain provisions of norms on Prepaid Payment Instruments (PPIs) and Know Your Customer (KYC).
The central bank, however, said that the penalty is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the entity with its customers.
