Licence of Sarjeraodada Naik Shirala Sahakari Bank cancelled

Mar 03, 2022 04:00 am

The Reserve Bank of India (RBI) on Wednesday cancelled the licence of Sarjeraodada Naik Shirala Sahakari Bank in Maharashtra, as the bank does not have adequate capital and earning prospects (as mentioned by the central bank).

This came into effect from the close of business on March 2, 2022, the RBI said. Further, the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.

"The continuance of the bank is prejudicial to the interests of its depositors and the bank with its present financial position would be unable to pay its present depositors in full, the RBI said. Public interest would be adversely affected if the bank is allowed to carry on its banking business any further, the RBI added.

"Consequent to the cancellation of its licence, Sarjeraodada Naik Shirala Sahakari Bank Ltd, Shirala, Dist. Sangli, Maharashtra, is prohibited from conducting the business of ‘banking’ 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 RBI declared.

On liquidation, every depositor would be entitled to receive deposit insurance claim amount up to a monetary ceiling of Rs 5 lakh from Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of the DICGC Act, 1961, the RBI said.

As per the data privided by the bank, more than 99 percent of the depositors are entitled to receive full amount of their deposits from DICGC. As on January 27, 2022, DICGC has sanctioned Rs 64.70 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act,1961 based on the willingness received from the concerned depositors of the bank, the RBI said.

Prior to this Mantha Urban Cooperative Bank had lost its banking license on Feb 16, 2022. RBI seems focused on acting against the cooperative banks with weak financials.