The Reserve Bank of India (RBI) on June 18 said it has cancelled the licence of Millath Co-operative Bank Ltd., Davangere, Karnataka citing inadequate capital.
Consequently, the bank ceases to carry on banking business, with effect from the close of business on June 18, 2022, the RBI said.
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, the RBI said in a press release.
The Reserve Bank cancelled the license of the bank as the lender did not have adequate capital and earning prospects, the RBI said, adding the continuance of the bank is prejudicial to the interests of its depositors.
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 added.
On liquidation, every depositor would be entitled to receive deposit insurance claim amount up to a monetary ceiling of Rupees 5,00,000 only from Deposit Insurance and Credit Guarantee Corporation (DICGC).
As per the data submitted by the bank, all the depositors will receive the full amount of their deposits from DICGC, the RBI said.
As of May 18, 2022, DICGC has already paid Rs 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 RBI said.