The Reserve Bank of India (RBI) has taken a significant step by cancelling the license of Adarsh Mahila Nagari Sahakari Bank Maryadit, situated in Aurangabad, Maharashtra. Effective from December 29, 2023, this decision brings an end to the bank’s operations in the banking sector, impacting depositors’ ability to carry out transactions from yesterday.
Reasons for Licence Cancellation:
- Inadequate Capital and Earning Prospects: The bank’s financial health lacked capital and potential for earnings, violating provisions of the Banking Regulation Act, 1949.
- Failure to Comply with Regulatory Requirements: Non-compliance with conditions in Sections 22(3) (a) to (e) and Section 56 of the Banking Regulation Act, 1949.
- Risk to Depositors’ Interests: The bank’s continuance was considered harmful to depositors’ interests.
- Inability to Pay Depositors: The bank’s financial position was so weak that full repayment to depositors was in doubt.
- Public Interest at Stake: Allowing the bank to continue operations was deemed against public interest.
Effects of Licence Cancellation:
- Adarsh Mahila Nagari Sahakari Bank is prohibited from conducting banking activities, including deposit acceptance and repayment.
Depositor Insurance Coverage:
- On liquidation, depositors are entitled to insurance coverage up to ₹5,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per the DICGC Act, 1961.
- As of October 31, 2023, DICGC has disbursed ₹185.38 crore, covering insured deposits, to eligible depositors of the bank.
Key Highlights:
- RBI’s Strict Action: License cancellation due to inadequate capital and non-compliance with regulatory requirements.
- Prohibition on Banking Activities: The bank is barred from conducting any form of banking business.
- Depositors’ Protection: Nearly all depositors (99.77%) are entitled to receive the full amount of their deposits under DICGC insurance.
- DICGC’s Role: Proactive disbursement of insured deposits to protect the interests of depositors.
This development serves as a crucial reminder of the RBI’s commitment to maintaining the stability and integrity of the banking sector in India.
