The Reserve Bank of India has cancelled the licence of Laxmi Cooperative Bank Ltd, Solapur amid the continued deterioration in its financial position. Depositors can claim a maximum of Rs 5 lakh from the bank which was established almost a century back in 1929.
Consequently, the bank ceases to carry on banking business, with effect from the close of business on September 22, 2022, the RBI said in a release.
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 RBI said.
The Reserve Bank cancelled the licence of the bank as the lender does not have adequate capital and earning prospects and the continuance of the bank is prejudicial to the interests of its depositors, the RBI said.
The bank with its present financial position would be unable to pay its present depositors in the full and public interest would be adversely affected if the bank is allowed to carry on its banking business any further, the RBI said.
Consequent to the cancellation of its licence, the bank is prohibited from conducting the business of banking with immediate effect, the RBI said.
The bank had been under the RBI scanner for a while and the decision comes less than a year after several restrictions, including Rs 1,000 cap on withdrawals, were imposed on it. In May, the RBI extended the period of restriction up to August 11, 2022 which was subject to review.
As per the directions, the bank was not allowed, without the prior approval of the RBI, to grant or renew any loans and advances, make any investment, incur any liability, and disburse or agree to disburse any payment.
The RBI cited lack of adequate funds and earning prospects as the reason behind its decision to suspend the bank’s license. It also mentioned non-compliance by the bank as a reason behind the order which comes into effect starting today.
The RBI had last month cancelled the licence of Pune-based Rupee Co-operative Bank Ltd. The central bank's direction will come into effect from today.
Consequent to the cancellation of its licence, '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 with effect from September 22, 2022, it said.