The Reserve Bank of India (RBI), the country’s central bank, has cancelled the licence of Vasantdada Nagari Sahakari Bank (VNSB), in Maharashtra.
The licence has been revoked as the bank failed to comply with the requirements of the Banking Regulation Act (BR Act), the central bank said.
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Effective 11 January 2021, the bank can no longer accept or repay deposits, or carry on its banking business.
RBI said that 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 full; and it is necessary in public interest and for preventing the affairs of the bank being conducted in a manner detrimental to the interests of its depositors to wind up the affairs of the bank.”
RBI has started the liquidation proceedings for VNSB with the licence cancellation. It will begin the process of paying its depositors as well.
In a statement, the central bank said that 99% of the bank’s depositors will get full repayment of their deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
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By GlobalDataFollowing the liquidation, every depositor is entitled to be repaid up to INR500,000 ($6,828) from the DICGC.
RBI has requested the Commissioner for Cooperation and Registrar of Cooperative Societies (RCS) to issue an order for closing the bank and appointing a liquidator.
Last month, RBI also cancelled the licence of Karad Janata Sahakari Bank (KJSB) in Maharashtra.
