The Reserve Bank of India has cancelled the licence of Vijayawada-based Durga Co-operative Urban Bank as the lender does not have adequate capital and earning prospects.

The bank ceases to carry banking business, with effect from the close of business on 12 November 2024, the RBI said, adding that the Commissioner for Cooperation and Registrar of Cooperative Societies, Andhra Pradesh, has also been requested to issue an order for winding up the bank and appoint a liquidator.

On liquidation, every depositor would be entitled to receive a 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).

"As per the data submitted by the bank, 95.8% of the depositors are entitled to receive the full amount of their deposits from DICGC," the RBI said.

As of 31 August 2024, DICGC has already paid Rs 9.84 crore of the total insured deposits.

Besides not have adequate capital and earning prospects, the RBI said Durga Co-operative Urban Bank has also failed to comply with the requirements of the Banking Regulation Act, 1949.

"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," it said.

Emphasising that public interest would be adversely affected if the bank is allowed to carry on its banking business any further, RBI said consequent to the cancellation of its licence, 'The Durga Co-operative Urban Bank Ltd, Vijayawada' is prohibited from conducting the business of 'banking' with immediate effect.

Banking includes, among other things, acceptance of deposits and repayment of deposits.