Tag: Directions

RBI cancels licence of Pune-based Shivajirao Bhosale Sahakari Bank

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The Reserve Bank of India (RBI) has cancelled the licence of Pune-based Shivajirao Bhosale Sahakari Bank. The RBI said the bank ceases to carry on banking business, with effect from the close of business on May 31.

With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of the bank as per the Deposit Insurance and Credit Guarantee Corporation (DICGC). Act, 1961, will be set in motion, the central bank said in a statement.

“As per the data submitted by the bank, more than 98 per cent of the depositors will receive full amounts of their deposits from DICGC.

“On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of ₹5 lakh from the DICGC subject to the provisions of the DICGC Act, 1961,” RBI said.

Liquidator for the bank

The Registrar of Cooperative Societies, Maharashtra, has been requested to issue an order for winding up the bank and appoint a liquidator for the bank, it added.

“The bank does not have adequate capital and earning prospects. As such, it does not comply with the provisions…of the Banking Regulation Act, 1949.

“…The continuance of the bank is prejudicial to the interests of its depositors,” the statement said.

The RBI observed that the bank with its present financial position would be unable to pay its present depositors in full.

According to the central bank, public interest would be adversely affected if the bank is allowed to carry on its banking business any further.

The bank was placed under RBI Directions from the close of business on May 4, 2019.

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RBI withdraws directions on Kolikata Mahila Co-op Bank

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The Reserve Bank of India on Saturday withdrew its directions issued to Kolkata-based Kolikata Mahila Co-operative Bank.

The RBI had issued directions to the bank from the close of business on July 9, 2019.

“Reserve Bank, on being satisfied that in the public interest it is necessary to do so, in exercise of the powers vested in it under…the Banking Regulation Act, 1949 (AACS), hereby withdraws with effect from April 10, 2021, the said directions so issued to Kolikata Mahila Co-operative Bank Limited, Kolkata, West Bengal,” the central bank said in a statement.

Under the directions, which were issued in 2019, the bank, without prior approval of RBI, could not grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, among others.

The directions also capped deposit withdrawal at ₹1,000 of the total balance held by depositors in every savings bank or current account or any other deposit account. With the withdrawal of the directions, the cap on deposit withdrawal also goes.

Earlier this week, RBI withdrew the All Inclusive Directions it issued to Kolhapur-based Youth Development Cooperative Bank Ltd.

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Deccan Urban Co-op Bank put under RBI ‘Directions’ as of Feb 19

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The Reserve Bank of India (RBI) has issued Directions to Deccan Urban Co-operative Bank (Vijayapur, Karnataka), whereby, as from the close of business on February 19, 2021, deposit withdrawals have been capped at ₹1,000 per depositor.

“Considering the bank’s present liquidity position, a sum not exceeding ₹1000 of the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn, but are allowed to set off loans against deposits subject to the conditions stated in the above RBI Directions.

Also read: Banks under Directions: Govt, RBI working on allowing depositors withdraw up to ₹5 lakh

“However, 99.58 per cent of the depositors are fully covered by the DICGC insurance scheme,” the central bank said in a statement.

According to the Directions, the chief executive officer of the bank shall not, without prior approval of RBI in writing grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, among others.

“The issue of the above Directions by the RBI should not per se be construed as cancellation of banking license by RBI.

“The bank will continue to undertake banking business with restrictions till its financial position improves. The Reserve Bank may consider modifications of these Directions depending upon circumstances,” the central bank said.

Besides Deccan Urban Co-operative Bank, RBI has imposed directions on two other urban co-operative banks — Sarjeraodada Naik Shirala Sahakari Bank (Shirala, Sangli District, Maharashtra) with effect from close of business on February 3, and Independence Co-operative Bank (Nashik, Maharashtra) with effect from close of business on February 10 — since the beginning of 2021. .

According to the RBI’s report on Trend and Progress of Banking in India 2019-20 (released on December 29, 2020), since April 1, 2015, 52 UCBs have been placed under All Inclusive Directions by the RBI.

Of the total claims settled by the Deposit Insurance and Credit Guarantee Corporation (DICGC) since inception, around 94.3 per cent of claims pertained to co-operative banks that were liquidated, amalgamated, or restructured.

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