RBI cancels license of two co-op banks, halts transactions; more details available on the news.

RBI Cancels License: Operations of Two Cooperative Banks Suspended

• The Reserve Bank of India (RBI) has decided to cancel the license of two cooperative banks, resulting in the complete suspension of their operations.

Action on the Two Banks

The RBI announced the cancellation of licenses for Shri Sharda Mahila Sahakari Bank in Tumkur, Karnataka, and Harihareshwar Bank in Satara, Maharashtra. The decision was made due to insufficient capital and lack of earning potential for both banks.

Deposits of Customers

RBI assured that deposits up to Rs 5 lakh in banks are safe, as the Deposit Insurance and Credit Guarantee Corporation (DICGC) provides insurance coverage for this amount. Depositors with amounts exceeding Rs 5 lakh may lose the excess funds.

Refunds for Depositors

According to RBI, 99.96% of depositors from Harihareshwar Sahakari Bank will receive their total money from DICGC. As of March 8, 2023, customers have received Rs 57.24 crore from DICGC. Similarly, approximately 97.82% of depositors from Shri Sharda Mahila Sahakari Bank will receive a full refund, with Rs 15.06 crore already returned by DICGC as of June 12, 2023.

Banking Operations Ban

With the cancellation of the license, both banks are prohibited from engaging in any banking activities, including accepting deposits. The RBI has instructed the Commissioner of Co-operative and Registrar of Co-operative Societies to issue an order to cease operations and appoint a liquidator for the banks.