The Reserve Bank of India (RBI) has cancelled the licence of Pune-based Seva Vikas Co-operative Bank due to lack of adequate capital and earning prospects.

The bank ceases to carry on banking business, with effect from the close of business on October 10, 2022, RBI said in a statement.

The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank, the RBI said.

"The continuance of the bank 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; and the public interest would be adversely affected if the bank is allowed to carry on its banking business any further," it added.

 Consequent to the cancellation of its licence, the Seva Vikas Co-operative Bank Ltd., Pune, Maharashtra has been prohibited from conducting the business of 'banking' which includes, among other things, acceptance of deposits and repayment of deposits as defined in Section 5 (b) read with Section 56 of the Banking Regulation Act, 1949 with immediate effect.

On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5,00,000 from Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of DICGC Act, 1961.

 According to the data submitted by the bank, about 99% of the depositors are entitled to receive the full amount of their deposits from DICGC.

 In a separate action, the RBI imposed a monetary penalty of Rs 48 lakh on The Kerala State Co-operative Bank Ltd, Thiruvananthapuram for non-compliance with the provisions of section 56 of Banking Regulation Act, 1949 (the Act) and directions issued by RBI on ‘Gold Loan - Bullet Repayment’.