HomeBusinessRBI Cancels Licence of Solapur-based Laxmi Co-operative Bank

RBI Cancels Licence of Solapur-based Laxmi Co-operative Bank

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The Reserve Bank of India on Thursday said it has cancelled the licence of Solapur (Maharashtra) based The Laxmi Co-operative Bank Limited as the lender does not have adequate capital and earning prospects. As per the data submitted by the cooperative bank, more than 99 per cent of the depositors are entitled to receive full amount of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC), the RBI said in a statement.

As of September 13, 2022, the DICGC has already paid Rs 193.68 crore of the total insured deposits, it added. “The bank does not have adequate capital and earning prospects,” the RBI said while announcing that The Laxmi Co-operative Bank ceases to carry on banking business, with effect from the close of business on Thursday (September 22, 2022).

As per the statement, the co-operative bank has failed to comply with the requirements the Banking Regulation Act, 1949 and its continuance is prejudicial to the interests of its depositors. “The bank with its present financial position would be unable to pay its present depositors in full,” the RBI said.

Consequent to the cancellation of its licence, the bank is prohibited from conducting the business of banking’ which includes, among other things, acceptance of deposits and repayment of deposits. The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank, the central bank added.

On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to Rs 5 lakh from DICGC.

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