Shree Mahalaxmi Urban Co-operative Credit Bank does not have adequate capital and earning prospects, RBI said; 97.9% of depositors would receive full amount of their deposits from Deposit Insurance and Credit Guarantee Corporation.
The Reserve Bank of India (RBI) has cancelled the licence of Karnataka-based Shree Mahalaxmi Urban Co-operative Credit Bank as its financial conditions deteriorated beyond repair.
According to the RBI, the lender does not have adequate capital and earning prospects and does not comply with certain provisions of the Banking Regulation Act, 1949.
"The bank with its present financial position would be unable to pay its present depositors in full," the central bank said, adding that continuation of the bank would be prejudicial to the interests of its depositors.
The Registrar of Co-operative Societies, Karnataka has been requested to issue an order for winding up the bank and appoint a liquidator, the Reserve Bank of India (RBI) said in a statement on Thursday.
On liquidation, about 97.9% of depositors would receive full amount of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC).
Consequent to the cancellation of its licence, Shree Mahalaxmi Urban Co-operative Credit Bank, located in Gokak (Karnataka), has been prohibited from conducting the business of 'banking' which includes, among other things, acceptance of deposits and repayment of deposits, from Thursday.
