INDIA. Mumbai: The Reserve Bank of India (RBI) has cancelled the licence of the Rupee Co-operative Bank Ltd, Pune, Maharashtra and has directed it to close down with effect from September 22, since it does not have Adequate Capital and Earning Prospects.
According to an RBI notification dated August 8, the bank must close its transactions within six weeks. The Maharashtra Commissioner for Cooperation and Registrar of Cooperative Societies has also been asked to issue a winding-up order for the bank and appoint a liquidator.
The order has been issued in compliance with the Bombay High Court order dated September 12, 2017, in response to Writ Petition No. 2938 of 2014 (Bank Employees Union, Pune vs. The State of Maharashtra & Ors.) and Writ Petition No. 9286 of 2017 (Naresh Vasant Raut & Ors. Vs. The State of Maharashtra & Ors).
The RBI revoked the licence because the bank lacked adequate capital and earning potential and failed to comply with Sections 11(1) and 22(3)(d) of the Banking Regulation Act of 1949, as read with Section 56.
The bank has violated Sections 22(3)(a), 22(3)(b), 22(3)(c), 22(3)(d), and 22(3)(e) of the Banking Regulation Act, 1949, as read with Section 56, and its continued existence is detrimental to depositors’ interests.
Furthermore, if the bank is allowed to continue operating in the banking industry, it will be unable to pay its current depositors in full, and the public interest will suffer as a result.
Consequent to the cancellation of its license, “Rupee Co-operative Bank Ltd, Pune” stands prohibited from conducting the business of ‘banking’ which includes, among other things, acceptance of deposits and repayment of deposits as defined in Section 5(b) read with Section 56 of the Banking Regulation Act, 1949 with effect from September 22,” the statement issued by Chief General Manager Yogesh Dayal said.
Subject to the provisions of the DICGC Act, 1961, every depositor would be entitled to a deposit insurance claim amount of Rs 5,00,000/- (Rupees five lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC) in the event of liquidation. According to the bank’s data, more than 99% of depositors are entitled to receive the full amount of their deposits from DICGC.
As of May 18, the DICGC had already paid Rs.700.44 crore of the total insured deposits under Section 18A of the DICGC Act, 1961, based on the willingness of the bank’s depositors. Over 64,000 depositors have already repaid their funds.
The bank’s closure comes after its plan to merge with Saraswat Bank failed. Earlier reports had revealed that the bank had accumulated losses of Rs 625 crore and liquidity of Rs.823 crore. Headquartered in Pune and the bank has around 39 branches across Maharashtra.