The Reserve Bank of India (RBI) is taking a very strict stance regarding compliance. RBI has canceled the license of Varanasi’s Banaras Merchantile Co-operative Bank.
According to the circular issued by RBI, the license of the bank has been canceled on July 4, 2024.
Why did RBI take action?
RBI said that the financial position of Merchantile Co-op Bank was not good. Due to which its license has been cancelled.
Giving details, RBI said that the cooperative bank does not have adequate capital and earning prospects and its continuation is detrimental to the interests of its depositors. Apart from this, the bank is unable to make full payment to its current depositors with its current financial position.
What will happen to the customers now?
According to a circular issued by the RBI, as per the data submitted by the bank, 99.98 per cent of the depositors are entitled to receive the full amount of their deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
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The Cooperative Commissioner and Registrar of Cooperative Societies, Uttar Pradesh have also been requested to issue an order to close the bank and appoint a liquidator.
Customers of the bank can claim their deposit amount. Customers are entitled to receive deposit insurance claim amount of up to Rs 5 lakh of their deposits from DICGC.
As of April 30, 2024 this year, DICGC has already paid Rs 4.25 crore of the total insured deposits under the provisions of the DICGC Act based on the wishes received from the respective depositors of the bank.
