RBI cancels licence of Bhagyodaya Friends Urban Co-operative Bank
RBI said the lender does not have adequate capital and earning prospects and as such, it does not comply with the various provisions of the Banking Regulation Act, 1949
Mumbai: The RBI on Thursday said it has cancelled the licence of Bhagyodaya Friends Urban Co-operative Bank Limited (Amravati), as the lender does not have adequate capital and will be unable to pay its present depositors in full.
However, as per the data submitted by the bank, more than 98% of the depositors will receive the full amounts of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC), the Reserve Bank said.
On liquidation, every depositor would be entitled to receive a deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5 lakh from DICGC, subject to the provisions of the DICGC Act, 1961.
Bhagyodaya Friends Urban Co-operative Bank Limited, Warud, ceases to carry on banking business, with effect from the close of business on Thursday.
Lack of capital
Giving reasons for cancelling the licence of the bank, the RBI said the lender does not have adequate capital and earning prospects and as such, it does not comply with the various provisions of the Banking Regulation Act, 1949.
“The continuance of the bank is prejudicial to the interests of its depositors,” the banking regulator said, adding the bank with its present financial position would be unable to pay its present depositors in full.
Also, the public interest would be adversely affected if the bank is allowed to carry on its banking business any further, the Reserve Bank of India noted.
The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has also been asked to issue an order for winding up the bank and appoint a liquidator for the bank.