The Reserve Bank of India (RBI) has canceled the license of The Durga Co-operative Urban Bank based in Vijayawada, Andhra Pradesh. The decision was made due to the bank’s inability to maintain adequate capital and generate sustainable earnings. As per RBI’s directive, the bank will cease its banking operations by the close of business on November 12, 2024.
Key Details of the Closure
- Reason for Cancellation
- Insufficient capital and earning prospects.
- Non-compliance with provisions of the Banking Regulation Act, 1949.
- Continuation of the bank would adversely affect the interests of depositors.
- Liquidation Process
- The Registrar of Co-operative Societies in Andhra Pradesh has been directed to initiate the liquidation process and appoint a liquidator.
- Impact on Depositors
- Approximately 95.8% of depositors will get their full deposit amount under the Deposit Insurance and Credit Guarantee Corporation (DICGC) coverage.
- Each depositor is insured up to ₹5,00,000 for their deposits.
- The bank has already paid out ₹9.84 crore to insured depositors as of August 31, 2024.
Why Did the Bank Shut Down?
- Non-viability: The bank’s financial health indicated that it could not meet its depositor obligations or generate sufficient income.
- Regulatory Non-compliance: The bank failed to adhere to the guidelines under the Banking Regulation Act, 1949.
- Depositor Risk: Continuing operations would put depositor interests at further risk.
Impact on Depositors
| Category | Details |
|---|---|
| Total Insured Depositors | 95.8% of all depositors |
| Insurance Limit | ₹5,00,000 per depositor |
| Total Insurance Payout (as of August 31, 2024) | ₹9.84 crore |
| Uninsured Depositors | 4.2% of depositors will not recover the full amount |
Deposit insurance provided by DICGC covers all types of deposits, including savings, current, fixed, and recurring accounts, up to the prescribed limit of ₹5,00,000.
What’s Next?
Depositors with balances exceeding ₹5,00,000 may face financial losses. To claim their insured deposits, affected account holders should contact the liquidator once appointed by the Registrar of Co-operative Societies.
Stay informed and check updates from RBI and DICGC for further developments.
Something went wrong. Please refresh the page and/or try again.
