The Reserve Bank of India (RBI) has canceled the license of Vijayawada-based ‘The Durga Co-operative Urban Bank’. RBI has canceled the license of the bank due to lack of adequate capital and earning prospects.
The Reserve Bank said that the bank will close the banking business from the close of business on November 12, 2024. Also, the Cooperative Commissioner of Andhra Pradesh and the Registrar of Cooperative Societies have been requested to issue an order to close the bank and appoint a liquidator.
95.8 percent of depositors will get their money
On liquidation, every depositor will be entitled to receive deposit insurance claim amount on deposits up to a limit of Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC). RBI said, ‘According to the data submitted by the bank, 95.8 percent of the depositors are entitled to receive the full amount of their deposits from DICGC.’ DICGC has paid Rs 9.84 crore out of the total insured deposits till August 31, 2024.
Durga Sahakari Urban Bank was closed due to this reason.
Regarding cancellation of license of Durga Sahakari Urban Bank, RBI said that the bank does not have sufficient capital and earning prospects. It could not follow the rules of Banking Regulation Act, 1949. It said, ‘The continuation of the bank is not good for the interest of its account holders. Due to its current financial position, the bank will be unable to make full payment to its existing depositors.’ After the closure of the bank, 4.2 account holders will not be able to get the entire money deposited by them.
What will be the impact on the account holders?
The impact of the closure of any bank on its account holders depends on the amount deposited in their account. The money deposited in the account of those with deposits up to Rs 5 lakh is insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC). But those with amounts more than this are sure to suffer losses. All types of deposit accounts of banks are insured by DICGC.
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