The Reserve Bank of India (RBI) has cancelled the licence of Karnala Nagari Sahakari Bank, Panvel in Maharashtra for not having adequate capital and earning prospects to pay its present depositors in full.

The bank ceased to carry on banking business with effect from the close of business on 13 August 2021, the RBI said in a release.

As per the data submitted by the bank, 95% of the depositors will receive full amounts of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC), the RBI said while announcing cancellation of the bank’s licence.

On liquidation, every depositor would be entitled to receive deposit insurance claim amount of deposits up to Rs five lakh from the DICGC.

RBI said the licence of Karnala Nagari Sahakari Bank was cancelled through an order dated 9 August 2021.

The bank, according to the RBI, does not have adequate capital and earning prospects and failed to comply with the requirements of various sections of the Banking Regulation Act, 1949

The continuance of the bank is prejudicial to the interests of its depositors and the bank with its present financial position would be unable to pay its present depositors in full, the RBI said, adding public interest would be adversely affected if the bank is allowed to carry on its banking business any further.

Now, Karnala Nagari Sahakari Bank cannot conduct the business of banking, which includes acceptance of deposits and repayment of deposits.

“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.

In 2021, the RBI has already cancelled the licence of three banks --Shivajirao Bhosale Sahakari Bank on 31 May, Bhagyodaya Friends Urban Co-operative Bank on 22 April and Vasantdada Nagari Sahakari Bank on 11 January.

Last year, the central bank had cancelled three licences – Karad Janata Sahakari Bank, CKP Co-operative Bank and the Mapusa Urban Co-operative Bank of Goa.

Meanwhile, in separate statements, RBI said it has imposed penalty on three cooperative banks for deficiencies in regulatory compliance.

A penalty of Rs 25 lakh each has been imposed on Madhya Pradesh Rajya Sahakari Bank Maryadit, Bhopal, and The Greater Bombay Cooperative Bank Ltd, Mumbai.

RBI has also imposed a penalty of Rs 50,000 on Jalna People's Cooperative Bank Ltd, Jalna, Maharashtra.

In all the three cases, RBI said the penalties are based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the cooperative banks with their respective customers.