RBI Today Cancels the Banking License of Karad Janata Sahakari Bank . Since 2017 ,Restrictions were already imposed on this bank . RBI cancels Banking License because the Bank doesn’t have adequate cash to operate . Also bank is not able to show any earning prospects .
On 7 December 2020 , RBI ordered the bank to close it’s business and on 8 December 2020 cancels the license of Maharashtra Based Karad Janata Sahakari Bank .
What Does this License Cancellation Means ?
This License Cancellation Means that Bank is prohibited from doing Banking Business Under Section 5(B) which means Bank will not Accept any deposit and repayment of deposit will not happen in Bank .
Why RBI Cancels License ?
1- According to Section 22 . If any bank doesn’t have any adequate cash to operate and bank fails to show any earning prospects then RBI has the rights to cancel the Banking License of that bank .
2- According to RBI Continuation of Bank is prejudicial to the interest of it’s depositors .
3- In it’s Present Financial Condition bank will not be able to pay full to it’s current Depositors
4- Allowing to Run this Bank will be against the Public Interest and Public Interest will be affected .
What will Happens to the depositor’s deposit ?
After the Cancellation of Banking License of Karad Janata Sahakari Bank . Depositors will get there deposit according to Deposit Insurance and Credit Guarantee Corporation (DICGC) Act 1961 . According to DICGC Act 1961 if RBI cancels Banking License of any Bank and do the liquidation of that bank than Depositor will get upto 5 Lakh Rupees . if any depositor have more than 5 Lakh deposited in it’s Account than also he will get only 5 Lakh Rupees. Earlier this limit was only 1 Lakh Rupees But Failure of Yes Bank and PMC Bank forces RBI to Increases this limit upto 5 Lakh Rupees .
According to RBI 99% Depositors will get there Deposit Back from DICGC.
Who will Appoint the Liquidator for the Bank ?
Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra will appoint the liquidator for the Karad Janata Sahakari Bank . RBI in it’s Circular requested Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra to issue and order for winding up of the bank and appoint a liquidator of bank