Money & Banking

RBI cancels Karnataka-based Millath Co-operative Bank’s license

BL Mumbai Bureau | | Updated on: Jun 19, 2022
Representative image

Representative image | Photo Credit: Jacob Thomas@Chennai

“All the depositors will receive full amount of their deposits from DICGC,” the central bank said.

The Reserve Bank of India (RBI) has cancelled the license of Millath Co-operative Bank Ltd., Davangere in Karnataka, due to inadequate capital and earning prospects, and its continuance is prejudicial to the interests of its depositors.

The other reasons cited by RBI for cancellation of the bank’s license are: non-compliance with some of the provisions of the Banking Regulation Act, 1949; the Bank with its present financial position, would be unable to pay its present depositors in full; and the public interest would be adversely affected if the bank is allowed to carry on its banking business any further.

Request for liquidation

“The Registrar of Cooperative Societies, Karnataka, has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank,” as per the central bank’s 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, RBI said.

“As per the data submitted by the bank, all the depositors will receive full amount of their deposits from DICGC. As on May 18, 2022, DICGC has already paid ₹10.38 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,” the central bank said.

Consequent to the cancellation of its license, Millath Co-operative Bank is prohibited from conducting banking business which includes acceptance of deposits and repayment of deposits as defined in Section 5(b) read with Section 56 of the Banking Regulation Act, 1949, with immediate effect, according to the banking regulator.

Published on June 19, 2022
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