RBI cancels licence of Mumbai-based The City Co-operative Bank

The Reserve Bank on Wednesday cancelled the licence of The City Co-operative Bank, Maharashtra for lacking adequate capital and earning prospects.

The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has also been asked to issue an order for winding up the bank and appoint a liquidator, RBI said.

According to RBI, the cooperative bank ceases to carry on banking operations with effect from the close of business hours on June 19, 2024.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 lakh only from Deposit Insurance and Credit Guarantee Corporation (DICGC).

"As per the data submitted by the bank, about 87 per cent of the depositors are entitled to receive full amount of their deposits from DICGC," RBI said.

As on June 14, 2024, DICGC has already paid Rs 230.99 crore of the total insured deposits based on the willingness received from the depositors concerned of the bank.

Giving details, RBI said the Mumbai-based cooperative bank does not have adequate capital and earning prospects.

"The bank with its present financial position would be unable to pay its present depositors in full," it said, and added that 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, The City Co-operative Bank has been prohibited from conducting the business of ‘banking' which includes, among other things, acceptance of deposits and repayment of deposits.