The Reserve Bank of India (RBI) said on Wednesday that it has cancelled the licence of Maharashtra-based Sarjeraodada Naik Shirala Sahakari Bank Limited as it has failed to comply with the regulations and does not have "adequate capital and earning prospects".
"Today, the Reserve Bank of India (RBI), vide order dated March 02, 2022, has cancelled the licence of Sarjeraodada Naik Shirala Sahakari Bank Ltd, Shirala, Dist. Sangli, Maharashtra. Consequently, the bank ceases to carry on banking business, with effect from the close of business on March 02, 2022. 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 RBI said in a statement.
The RBI said that 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 the full and public interest would be adversely affected if it is allowed to carry on its banking business any further.
"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".
On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5,00,000/- (Rupees Five lakh only) from Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of the DICGC Act, 1961.
As per the data submitted by the bank, more than 99 per cent of the depositors are entitled to receive the full amount of their deposits from DICGC.
As of 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.
( With inputs from ANI )
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