RBI cancels the license of this bank; what will happen to depositors' money? Find out

The Reserve Bank of India (RBI) has revoked the license of Banaras Mercantile Co-operative Bank, Varanasi, due to its worsening financial condition. The decision will halt the bank's operations from the close of business on July 4, 2024.

Impact on Depositors

Following the license cancellation, the Cooperative Commissioner and Registrar of Cooperative Societies of Uttar Pradesh have been asked to issue an order to close the bank and appoint a liquidator. According to RBI, based on the data submitted by the bank, 99.98 percent of the depositors will receive their entire deposit amounts from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

Upon liquidation, each depositor will be eligible to receive a deposit insurance claim amount of up to Rs 5 lakh from the DICGC. The RBI emphasised that the cooperative bank lacks sufficient capital and earning prospects, making its continuation not in the best interest of its depositors.

Current Financial Position

The RBI stated, "Due to its current financial position, the bank will be unable to make full payment to its depositors." To date, the DICGC has disbursed Rs 4.25 crore out of the total insured deposits based on claims received from the concerned depositors up to April 30.