Reserve Bank of India (RBI) has canceled the license of Millath Co-Operative Bank Ltd. as “the bank does not have sufficient capital and earning potential”, among other reasons. The bank has stopped doing banking business with effect from the close of business on Saturday (June 18). The Registrar of Co-operative Societies, Karnataka has also been requested to issue an order to close the bank and appoint a liquidator for the bank.
“The Reserve Bank of India (RBI) has canceled the license of ‘Milath Co-Operative Bank Ltd., Davangere, Karnataka’ vide order dated June 17, 2022. Consequently, the Bank shall carry on banking business with effect from the close of business on June 18, 2022. closes. The Registrar of Co-operative Societies, Karnataka has also been requested to issue an order to close the bank and appoint a liquidator for the bank,” the central bank said in a statement on June 18.
RBI stated that it has canceled the licence: a) the bank does not have sufficient capital and earning potential; b) Banks Section 22(3)(a), 22(3)(b), 22(3)(c), 22(3)(d) and 22(3)(e) of the Banking Regulation Act, 1949 read with 56; c) the continuance of the bank is prejudicial to the interests of its depositors; d) the bank will be unable to make full payments to its existing depositors with its current financial position; e) And public interest will be adversely affected if the bank is allowed to carry on its banking business.
“Consequent to the cancellation of its licence, ‘Milath Co-Operative Bank Ltd., Davangere, Karnataka’ is prohibited from carrying on the business of ‘Banking’ which shall, inter alia, include acceptance of deposits and repayment of deposits in section 5 (b) read with section 56 of the Banking Regulation Act, 1949, with immediate effect,” the RBI said.
RBI said that on liquidation, every depositor shall be entitled to receive deposit insurance claim amount from the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to a monetary limit of Rs 5 lakh, subject to the provisions of the DICGC. Act, 1961.
As per the data furnished by the bank, all the depositors will receive the full amount of their deposits from DICGC. As on May 18, 2022, DICGC has already paid Rs 10.38 crore of the total Sum Assured under the provisions of Section 18A of the DICGC Act, 1961 on the basis of the will received from the concerned depositors of the Bank.
Recently, RBI also canceled the Certificate of Registration (CoR) of three NBFCs including two housing finance companies. The CoR of Noida-based Malik Motor Finance Limited has been cancelled. The housing finance companies whose registrations have been canceled are Aizawl-based North East Region Housing Finance Company Limited and Gurgaon-based Aryarth Housing Finance Limited.
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