The RBI today said the licence of Alwar
Urban Co-operative Bank in Alwar, Rajasthan has been cancelled as it is not in
a position to pay its depositors in full as and when their claims accrue, among
other reasons.
The present
financial position of the bank leaves no scope for its revival, the RBI said,
adding that the cancellation of the licence is effective from the close of
business on July 5.
"The
Registrar of Co-operative Societies, Rajasthan 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.
With the
cancellation of licence and commencement of liquidation proceedings, the
process of paying the depositors of Alwar Urban Co-operative Bank as per the
DICGC Act will be set in motion.
"On liquidation,
every depositor is entitled to repayment of his/her deposits up to a monetary
ceiling of Rs 1,00,000 from the Deposit Insurance and Credit Guarantee
Corporation (DICGC) as per usual terms and conditions," the central bank
said.
As the licence stands
cancelled, the bank has been prohibited from conducting the business of
banking, which includes acceptance of deposits and repayment of deposits with
immediate effect, the RBI added.
The cancellation order
was issued on July 3.
Giving reasons for
cancellation of the licence, it said the bank does not have adequate capital
and earning prospects, and hence does not comply with the relevant provisions
of the Banking Regulation Act, 1949.
"The bank is not
in a position to pay its present and future depositors in full as and when
their claims accrue and thus, the bank does not comply...(with) the Banking
Regulation Act, 1949," RBI said.
It further said the
"affairs of the bank are being conducted in a manner detrimental" to
the interest of its present and future depositors.
The RBI also noted
that no useful purpose would be served by allowing the bank to continue.Rather,
public interest would be adversely affected if the bank is allowed to carry on
its banking business any further, it added.
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