The RBI said the licence of Deccan Urban Co-operative Bank, Karnataka, has been cancelled as the lender does not have adequate capital and earning prospects. 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 Deposit Insurance and Credit Guarantee Corporation (DICGC), the central bank said in a release.
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What The RBI Said:
“The bank does not have adequate capital and earning prospects,” the RBI said while announcing the cancellation of the licence”. It also said the Vijayapur-based bank with its present financial position would be unable to pay its present depositors in full.
The RBI has requested the Commissioner for Cooperation and Registrar of Cooperative Societies, Karnataka, 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 deposit insurance claim amount of his/her deposits up to ₹5 lakh DICGC. The central bank, however, said that the penalty is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the entity with its customers.