The Reserve Bank of India (RBI) is the regulator of all banks and non-banking financial companies (NBFCs) in India. It ensures that these entities follow the rules and protect the interests of customers. In case of violation of rules or any activity against the interests of customers, RBI takes strict action.

In April, RBI took strict action against many banks, including cancelling the licenses of four banks. These banks are no longer allowed to do business and all transactions by them have been stopped. However, customers of these banks are entitled to claim deposit insurance of up to ₹ 5 lakh on their deposits, which is provided by DICGC (Deposit Insurance and Credit Guarantee Corporation).

This month RBI has also imposed fines on 8 banks. All are accused of violating the rules. This list also includes Citi Bank, Punjab National Bank, and Kotak Mahindra Bank. However, this action will not affect the transactions or agreements between the customers and the bank.

Licenses of these banks canceled-

The license of Anjana Urban Co-operative Bank Limited, Aurangabad Maharashtra was canceled on 22 April.

The license of Color Merchants Co-operative Bank Limited, Ahmedabad, Gujarat was canceled on 16 April.

The license of Imperial Urban Co-operative Bank Limited, Jalandhar has also been canceled. An order has been issued to close the banking business from 25 April.

The license of Shankarrao Mohite Patil Sahakari Bank Limited, Akluj, Maharashtra has also been canceled. The bank is not allowed to do business from 11 April.

Why was the license canceled?

The Reserve Bank of India has canceled the licenses of some banks due to insufficient capital and profit prospects. According to RBI, the existence of these banks can pose financial risks to the depositors. Their financial condition is so weak that they are unable to return their deposits to even their current depositors.

RBI imposed fine on these banks-

Aryavart Bank, Lucknow

Shri Ganesh Sahakari Bank Ltd., Nashik, Maharashtra

Citibank NA

Punjab National Bank

IDFC First Bank Ltd.

Kotak Mahindra Bank Ltd.

Indian Overseas Bank

Indian Bank

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