On June 19, 2024, the Reserve Bank of India (RBI) cancelled the licence of “The City Co-operative Bank Ltd., Mumbai, Maharashtra.” This decision means the bank is no longer authorized to conduct banking business effective from the close of business on 19th June, 2024.
In addition, the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra, has been asked to order the bank’s liquidation and appoint a liquidator.
Reasons for cancellation of bank’s license:
The RBI revoked the bank’s licence for several reasons including:
- The bank lacks sufficient capital and viable earning prospects.
- The bank has failed to comply with various provisions of the Banking Regulation Act, 1949.
- The bank’s continued operation would be detrimental to the interests of its depositors.
- Given its current financial situation, the bank cannot fully repay its existing depositors.
- Allowing the bank to continue operating would negatively impact public interest.
RBI statement read that following the cancellation, “The City Co-operative Bank Ltd., Mumbai, Maharashtra” is now prohibited from conducting any banking activities, including accepting and repaying deposits, as defined under Section 5(b) read with Section 56 of the Banking Regulation Act, 1949, with immediate effect.
Upon liquidation, each depositor is entitled to receive insurance on their deposits up to a limit of ₹5,00,000 (Rupees five lakh) from the Deposit Insurance and Credit Guarantee Corporation (DICGC), in accordance with the provisions of the DICGC Act, 1961. According to the bank’s data, approximately 87% of the depositors will receive the full amount of their deposits from DICGC.
As of June 14, 2024, Deposit Insurance and Credit Guarantee Corporation (DICGC) has already disbursed ₹230.99 crore in insured deposits under Section 18A of the DICGC Act, 1961, based on the willingness expressed by the affected depositors.
