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Reserve Bank cancels license of Goa’s oldest Mapusa urban co-operative bank

Reserve Bank cancels license of Goa’s oldest Mapusa urban co-operative bank

India’s central bank, the Reserve Bank of India (RBI) has canceled the license granted to the Mapusa Urban Co-operative Bank of Goa Ltd., Goa to conduct 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. The order came into effect from the close of business on 16 April 2020. The RBI in its order gave 5 specific reasons for cancelling the licence of the bank. These include,

Key Points:

i.In the sequence of cancellation of license and commencement of liquidation work, the process of payment of amount will be initiated to depositors of Mapusa Bank as per Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961.

ii.During the liquidation, every depositor will be entitled to deposit up to Rs. 5 lakh from the DICGC subject to the general terms and conditions.

iii.The RBI also asked the Central Registrar of Co-operative Societies, Government of India (GoI) to issue orders for winding up the business of the bank and appoint a liquidator for the bank.

iv.The Mapusa bank was first placed under direction through an RBI directive dated July 24, 2015 after its Capital to Risk (Weighted) Assets Ratio (CRAR) declined drastically below the RBI’s 9% stipulation.

About CRAR:
Capital to Risk (Weighted) Assets Ratio, also known as Capital adequacy Ratio, is the ratio of a bank’s capital to its risk. RBI monitors the bank’s CAR to ensure that the bank can absorb a better amount of loss and complies with statutory Capital requirements. Higher CRAR indicates a bank is better capitalized.

About Mapusa Urban Co-operative Bank Ltd:
Headquarters– Mapusa, Goa
Managing director– Shailendra Sawant

About Reserve Bank of India (RBI):
Headquarters– Mumbai, Maharashtra
Governor– Shaktikanta Das

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