RBI cancelled these 7 bank licence: check your account status soon

The Reserve Bank of India (RBI) has once again cancelled the license of a co-operative bank due to deteriorating financial health.

The Reserve Bank of India (RBI) has once again cancelled the license of a co-operative bank due to deteriorating financial health. “The Banaras Mercantile Co-operative Bank will cease to carry on banking business with effect from the close of business on July 4, 2024,” RBI announced in its official statement. RBI cancelled these 7 bank licence: check your account status soon.

Additionally, the Commissioner for Co-operatives and Registrar of Co-operative Societies, Uttar Pradesh, has been asked to initiate the wind-up process and appoint a liquidator. In June, the RBI canceled the licenses of Mumbai’s City Co-operative Bank and Purvanchal Co-operative Bank in Uttar Pradesh’s Ghazipur due to similar issues of inadequate capital and earnings prospects.

RBI cancelled these 7 bank licence: check your account status soon
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Since January, the licenses of Sumerpur Mercantile Urban Co-operative Bank Ltd, Jai Prakash Narayana Nagari Sahakari Bank Ltd, Sri Mahalakshmi Mercantile Co-operative Bank Ltd and Hiriyur Urban Co-operative Bank Ltd have also been cancelled.

Co-operative banks were undercapitalized and did not make enough money. They do not guarantee repayment to all depositors and allowing them to continue would harm public interest. So RBI has decided to revoke the license to protect people’s money.

According to the banking regulator:

  1. The banks lacked adequate capital and earning prospects. They failed to comply with the provisions of the Banking Regulation Act, 1949.
  2. The banks’ continuance was detrimental to the interests of their depositors.
  3. With their current financial position, the banks would have been unable to pay their depositors in full.
  4. Allowing the banks to continue operations would adversely affect public interest.
RBI cancelled these 7 bank licence: check your account status soon
Image Credit to original Source

What is co-operative banking?

Cooperative banking consists of small financial institutions established by groups to meet the capital needs of their particular community. Owned and controlled by their members, these banks operate on the principle of co-operation. Members pool resources to provide banking services such as loans and savings accounts.

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How does a co-operative bank work?

Membership: Individuals or businesses meeting certain criteria can become members by purchasing shares or making an initial deposit.

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Democratic governance: Each member has equal voting rights irrespective of the number of shares held by him. Members elect a board of directors from among themselves to oversee operations and take key decisions.

Capital formation: Members contribute to the bank’s capital by purchasing shares or making deposits, which serve as the primary source of capital for the bank’s lending activities and other financial services.

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