Kapol Co-operative Bank has been prohibited from conducting the business of banking with immediate effect; RBI says bank does not have adequate capital and earning prospects and its continuance is prejudicial to the interests of its depositors.
The Reserve Bank of India (RBI) has cancelled the licence of Mumbai-based Kapol Co-operative Bank due to the lender’s inadequate capital and earning prospects.
The co-operative bank has been prohibited from conducting the business of 'banking' which includes, among other things, acceptance of deposits and repayment of deposits with immediate effect, the RBI said.
The Additional Secretary & Central Registrar of Cooperative Societies, Ministry of Cooperation, has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank, it said.
On liquidation, the RBI said every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5 lakh from Deposit Insurance and Credit Guarantee Corporation (DICGC).
About 96.09% of the depositors are entitled to receive full amount of their deposits from DICGC.
According to the RBI, the bank does not have adequate capital and earning prospects and its continuance is prejudicial to the interests of its depositors.
"The bank with its present financial position would be unable to pay its present depositors in full," the RBI said.
As of 24 July 2023, DICGC has already paid Rs 230.16 crore of the total insured deposits based on the willingness received from the concerned depositors of the bank.
