Mumbai, June 18 (SocialNews.XYZ) The Reserve Bank of India (RBI) on Thursday cancelled the licence of Karnataka-based Shree Mahalaxmi Urban Co-operative Credit Bank, citing its deteriorating financial condition, inadequate capital and poor earning prospects.
In a statement, the RBI said the bank, located in Gokak, does not have sufficient capital and fails to comply with certain provisions of the Banking Regulation Act, 1949.
The central bank added that the lender, in its current financial position, would be unable to repay its existing depositors in full.
“The Reserve Bank of India has cancelled the licence of Shree Mahalaxmi Urban Co-operative Credit Bank Ltd., Gokak, Karnataka, under Section 22 read with Section 56 of the Banking Regulation Act, 1949 (BR Act),” the central bank said.
“Consequently, the bank ceases to carry on banking business, with effect from the close of business on June 18, 2026,” it added.
The RBI said allowing the bank to continue its operations would be prejudicial to the interests of depositors and could adversely affect public confidence in the cooperative banking sector.
Following the cancellation of the licence, Shree Mahalaxmi Urban Co-operative Credit Bank has been prohibited from carrying out banking activities with immediate effect.
The restrictions include accepting fresh deposits and repaying existing deposits, among other banking operations.
The central bank has also requested the Registrar of Co-operative Societies, Karnataka, to initiate the process of winding up the bank and appoint a liquidator.
“The Registrar of Co-operative Societies, Karnataka has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank,” RBI said.
The RBI noted that depositors are protected under the deposit insurance framework administered by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
According to the regulator, around 97.9 per cent of the bank's depositors are expected to receive the full amount of their insured deposits from the DICGC once the liquidation process begins.
Source: IANS
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