Reserve Bank of India (RBI) has revoked the license of Malkapur Urban Co-operative Bank Limited, based in Buldhana, Maharashtra, effectively prohibiting the bank from conducting any banking activities as of July 5, 2023.
The RBI cited insufficient capital and earning prospects, as well as non-compliance with several sections of the Banking Regulation Act, 1949, including Section 22(3)(a), 22(3)(b), 22(3)(c), 22(3)(d), and 22(3)(e) read with Section 56. Consequently, the RBI has instructed the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra, to initiate the bank’s winding-up process and appoint a liquidator.
In the event of liquidation, depositors will be entitled to claim up to INR 5,00,000 (Rupees five lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC) under the DICGC Act, 1961 provisions. According to the bank’s submitted data, 97.60% of depositors qualify for full reimbursement from DICGC. To date, the DICGC has disbursed INR 496.98 crore based on the consent received from concerned depositors. The RBI emphasized that allowing the Malkapur Urban Co-operative Bank to continue operations would harm the public interest, as the bank’s current financial state prevents full repayment to its depositors.