Solapur-based Laxmi Co-operative Bank ceased operations from Thursday after the Reserve Bank of India (RBI) cancelled its licence for not having adequate capital and earning prospects.
The RBI has requested the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra, to issue an order for winding up the bank and appoint a liquidator for the bank.
On liquidation, every depositor would be entitled to receive insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC). About 99 per cent of the bank’s depositors are entitled to receive the full amount from the DICGC.
The DICGC has already paid Rs 193.68 crore of the total insured deposits, said the RBI in a statement.
Laxmi Co-operative was in breach of various provisions of Banking Regulations Act and in its present condition it would be unable to pay depositors in full. The continuance of the bank was prejudicial to the interests of its depositors. Public interest would be affected if the bank was allowed to carry on its business, said the RBI.