RBI Cancels License Of Mumbai-Based Bank; Here's What Depositors Need To Know

The Reserve Bank of India (RBI) on September 25 cancelled the licence of "The Kapol Co-operative Bank Limited, Mumbai, Maharashtra. Accordingly, the bank has ceased to carry on banking business, with immediate effect. Also, the Additional Secretary & Central Registrar of Cooperative Societies, Ministry of Cooperation, Government of India has been requested to issue an order for winding up the bank and appoint a liquidator for the bank.

Since the bank is winding up, RBI directed that every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of ₹5 lakh from Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of DICGC Act, 1961.

Data from RBI showed that 96.09% of the depositors are entitled to receive the full amount of their deposits from DICGC.

RBI revealed that as of July 24, 2023, DICGC has already paid ₹230.16 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961 based on the willingness received from the concerned depositors of the bank.

RBI cancelled the bank's licence on the following accounts:

- The bank does not have adequate capital and earning prospects.

- The bank does not comply with the provisions of Section 11(1) and Section 22 (3) (d) read with Section 56 of the Banking Regulation Act, 1949.

- The continuance of the bank is prejudicial to the interests of its depositors.

- The bank with its present financial position would be unable to pay its present depositors in full.

- Public interest would be adversely affected if the bank is allowed to carry on its banking business any further.

- Also, the bank has failed to comply with the requirements of Sections 22(3) (a), 22(3) (b), 22(3)(c), 22(3)(d) and 22(3)(e) read with Section 56 of the Banking Regulation Act, 1949.

Hence, RBI said that consequent to the cancellation of its licence, "The Kapol Co-operative Bank Limited, Mumbai, Maharashtra." is prohibited from conducting the business of 'banking' which includes, among other things, acceptance of deposits and repayment of deposits as defined in Section 5 (b) read with Section 56 of the Banking Regulation Act, 1949 with immediate effect.