The Reserve Bank of India (RBI) has cancelled the licence of Mumbai-based “The Kapol Co-operative Bank Limited.

Consequently, the bank ceases to carry on banking business, with effect from the close of business on September 25, 2023, as per a central bank statement.

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 Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of DICGC Act, 1961, it added.

As per the data submitted by the bank, 96.09 per cent of the depositors are entitled to receive full amount of their deposits from DICGC, RBI said.

As on July 24, 2023, DICGC has already paid ₹230.16 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961 based on the willingness received from the concerned depositors of the bank, according to the central bank.

RBI urges Central Registrar of Cooperative Societies to appoint liquidator

RBI said the Additional Secretary & Central Registrar of Cooperative Societies, Ministry of Cooperation, Government of India has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.

The Reserve Bank said Kapol Co-operative Bank’s licence has been cancelled as it does not have adequate capital and earning prospects and its continuance is prejudicial to the interests of its depositors.

RBI noted that the bank with its present financial position would be unable to pay its present depositors in full; and public interest would be adversely affected if the bank is allowed to carry on its banking business any further.