The RBI’s action has prompted the Commissioner and Registrar of Cooperative in Maharashtra to initiate proceedings for the bank’s closure and appoint a liquidator.
Upon the bank’s liquidation, every depositor will be eligible to claim a deposit insurance amount, with a maximum limit of Rs 5 lakh, from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
The RBI explained, “According to the bank’s submitted data, 99.92 percent of the depositors are entitled to receive the full amount of their deposits from DICGC.” So far, DICGC has already disbursed Rs 16.27 crore, covering a portion of the total insured deposits, based on the requests from affected depositors.
The central bank underlined that the Nashik Zilla Girna Sahakari Bank has been operating without sufficient capital and faces bleak prospects in terms of earnings. Furthermore, it has failed to comply with the stipulations outlined in the Banking Regulation Act of 1949.
The RBI also pointed out that allowing the bank to continue its operations would be detrimental to the interests of its depositors, given its current financial state. The bank is incapable of fully reimbursing its depositors.Therefore, the RBI’s decision to cancel the bank’s license, effective immediately, is a step taken in the interest of the public, as it would have adverse consequences if the bank were allowed to persist in its banking activities.
(With inputs from PTI)