The RBI’s recent decision to cancel the licenses of Adarsh Mahila Bank Aurangabad.
The Reserve Bank of India (RBI) made a crucial decision to cancel the license of the Adarsh Mahila Nagrik Sahakari Bank, situated in Aurangabad, on Friday. This impactful decision will affect the vast majority of depositors, with a staggering 99.77% being eligible to receive the entire sum of their deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC), as confirmed in a press release.
By the deadline of October 31, 2023, DICGC had already disbursed an amount of Rs 185.38 crore to cover insured deposits under the provisions outlined in Section 18A of the DICGC Act, 1961. This disbursement was made in accordance with the preferences expressed by the affected bank depositors.
Following the revocation of the bank’s license, it is set to cease all banking operations, effective from the close of business on December 29, 2023. Additionally, the Maharashtra Commissioner and Registrar of Cooperative Societies have been called upon to issue an order for the bank’s liquidation by appointing a suitable liquidator.
The RBI took this stringent action due to the inadequate capital and lack of promising earnings within the Adarsh Mahila Nagari Sahakari Bank, which violates the fundamental provisions specified in Section 11(1) and Section 22(3)(d) in conjunction with Section 56 of the Banking Regulation Act, 1949. Furthermore, the bank fell short of meeting various other regulatory mandates detailed in Sections 22(3) (a), (b), (c), (d), and (e) along with Section 56 of the same act, posing substantial risks to the interests of its depositors, as outlined in the RBI’s official release.
In light of these regulatory breaches, the bank’s continuation is deemed detrimental to the interests of its depositors. RBI highlighted concerns about the bank’s inability to fully repay its current depositors and the negative impact that prolonged banking operations could have on the public’s interests.
As a consequence of the license cancellation, Adarsh Mahila Bank Aurangabad, is barred from conducting any form of banking business, encompassing activities like deposit acceptance and repayment. This prohibition takes effect immediately.
Upon liquidation, every depositor will be eligible to claim a deposit insurance amounting to a maximum of Rs 5,00,000/- (Rupees five lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC) in accordance with the provisions specified in the DICGC Act, 1961.
In a separate development, the Reserve Bank of India also classified The Botad Peoples Co-operative Bank as a non-banking institution. Consequently, the banking license granted to The Botad Peoples Co-operative Bank Ltd., Botad, on February 17, 1998, was revoked, mandating the cessation of all banking operations, including the acceptance of deposits from non-members, effective from December 29, 2023.
Despite this reclassification, The Botad Peoples Co-operative Bank Ltd., Botad, is legally bound to settle unpaid and unclaimed deposits from non-members upon demand, even after being reclassified as a non-banking institution, as stated by the RBI.
Adarsh Mahila Bank Aurangabad
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