The Reserve Bank has cancelled the licence of The Mudhol Co-operative Bank Limited, Bagalkot (Karnataka), thus restricting it from repayment of deposits and acceptance of fresh funds. The bank does not have adequate capital and earning prospects, the Reserve Bank of India (RBI) said on Wednesday while announcing the cancellation of licence. RBI also said that bank with its present financial position would be unable to pay its present depositors in full.
Why this step taken by RBI?
- RBI said that bank with its present financial position would be unable to pay its present depositors in full.
- As per the data submitted by the bank, RBI said more than 99 per cent of the depositors are entitled to receive full amount of their deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
- On liquidation, every depositor would be entitled to receive deposit insurance claim amount up to Rs 5 lakh from the DICGC.
- DICGC has already paid Rs 16.69 crore of the total insured deposits based on the willingness received from the concerned depositors of the bank, the RBI added.