The Reserve Bank of India on Thursday has cancelled the licence of the Madgaum Urban Co-operative Bank Limited, Margao, Goa, as the bank with its current financial position would be unable to pay its present depositors in full.
According to the RBI, as per the data submitted by the bank, about 99 per cent of the depositors will receive full amounts of their deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC). The bank ceases to carry on banking business with effect from the close of business on July 29, 2021, the RBI said.
The Registrar of Cooperative Societies, Goa, has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank, the RBI said. On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs five lakh from the DICGC subject to the provisions of the DICGC Act, 1961.
“The bank does not have adequate capital and earning prospects. 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,” the RBI said.
Public interest would be adversely affected if the bank is allowed to carry on its banking business any further, it said.
With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of the bank as per the DICGC Act, 1961 will be set in motion.
Madgaum Urban Co-operative Bank was placed under RBI directions vide RBI directive dated April 26, 2019 from the close of business on May 2, 2019 for a period of six months.