The Reserve Bank of India (RBI) has cancelled the licence of Jai Prakash Narayan Nagari Sahakari Bank Basmathnagar, Maharashtra, as the lender, with its present financial position, would be unable to pay its present depositors in full.

The Commissioner for Co-operation and Registrar of Cooperative Societies, Maharashtra, has been requested to issue an order for winding up the bank and appoint a liquidator, the RBI said in a statement on Tuesday.

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, about 99.78% of the depositors are entitled to receive the full amount of their deposits from DICGC, the RBI said.

As of 21 September 2023, DICGC has already paid Rs 23.89 crore of the total insured deposits based on the willingness received from the concerned depositors of the bank.

Giving details, the RBI said Jai Prakash Narayan Nagari Sahakari Bank does not have adequate capital and earning prospects.

"The bank, with its present financial position, would be unable to pay its present depositors in full. Public interest would be adversely affected if the bank is allowed to carry on its banking business any further," it said.

The continuance of the bank is prejudicial to the interests of its depositors, the RBI said while cancelling the licence with effect from the close of business on 6 February 2024.

Consequent to the cancellation of its licence, the 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.