New Delhi. For some time now, the Central Reserve Bank (RBI) has started getting strict on cooperative banks. Some cooperative banks have been fined and the licenses of many banks have been cancelled. In this episode, on 4 July 2024, RBI has cancelled the license of Banaras Mercantile Co-operative Bank. With this, in the year 2024, RBI has cancelled the licenses of 7 cooperative banks so far.
Which bank will be taken action against in 2024
Recently, the Reserve Bank of India had canceled the licenses of City Co-operative Bank of Mumbai and Purvanchal Sahakari Bank in Ghazipur, Uttar Pradesh. Apart from this, the licenses of Sumerpur Mercantile Urban Co-operative Bank Limited, Jai Prakash Narayan Nagari Sahakari Bank Limited, Shri Mahalaxmi Mercantile Co-operative Bank Limited and Hiriyur Urban Co-operative Bank Limited have also been canceled.
Now the license of Banaras Mercantile Sahakari Bank, Varanasi has been canceled in view of its deteriorating financial condition. The central bank said that as per the data submitted by the bank, 99.98 percent of the depositors are entitled to get their entire deposit amount from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Who supervises the banks?
Cooperative banks in India are registered under the State Cooperative Societies Act. They are regulated by the RBI under the Banking Regulation Act, 1949 and the Banking Laws (Cooperative Societies) Act, 1955. They have been under the supervision of the RBI since 1966.
Why does RBI cancel the license?
Actually, the cooperative banks whose licenses have been canceled did not have enough capital. These banks were not earning enough money. They cannot guarantee the payment back to all the depositors. There is a possibility of loss if the banks are allowed to continue business. Therefore, RBI has canceled the license of cooperative banks to protect the money.
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