RBI cancels licence of Karad Janata Sahakari Bank; more than 99% of depositors to get full payment back under DICGC

The Reserve Bank of India (RBI) has cancelled the licence of the Karad Janata Sahakari Bank Ltd in Maharashtra to carry on banking business. The cancellation came in effect from the close of business on December 7, 2020.

The Reserve Bank cancelled the licence of the bank because the bank does not have adequate capital and earning prospects. However, more than 99 per cent of the depositors of the bank will get full payment of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC), the RBI said in a statement.

RBI Said, "With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of The Karad Janata Sahakari Bank Ltd., Karad, Maharashtra as per the DICGC Act, 1961 will be set in motion. On liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of Rs 5,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per usual terms and conditions. More than 99 per cent of the depositors of the bank will get full payment of their deposits from DICGC."

Consequent to the cancellation of its licence the bank is prohibited from conducting the business of 'banking' which includes acceptance of deposits and repayment of deposits with immediate effect.