The Reserve Bank of India (RBI), the country’s central bank, has cancelled the licence of Karad Janata Sahakari Bank (KJSB) in Maharashtra.

The licence of KJSB has been revoked as it had inadequate capital and earning prospects, the central bank said.

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The bank can no longer accept or repay deposits, nor operate anymore, effective from 7 December 2020.

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 public interest would be adversely affected if the bank is allowed to carry on its banking business any further.”

RBI began the liquidation proceeding for KJSB with the cancellation of licence. It will start the process of paying the depositors as well.

In a statement, RBI said that 99% of the bank’s depositors will get full payment of their deposits.

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Following the liquidation, every depositor is entitled to be repaid up to INR500,000 ($6,797) from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

The RBI added the bank was under ” All Inclusive Directions” since 07 November 2017.

The watchdog has asked the Commissioner for Cooperation and Registrar of Cooperative Societies to issue an order for winding up the bank and appointing a liquidator.

Recently, RBI ordered private sector lender HDFC not to launch any more digital businesses or take on new credit card customers until it meets “satisfactory compliance with the major critical observations”.