Banking sector regulator Reserve Bank of India took a big decision on Tuesday. The Central Bank has canceled the license of a Vijayawada based bank. Capital related problems were identified in this bank, after which the possibility was seen that the bank might not be able to repay the money to its customers, hence it was decided to cancel its license.
Central bank RBI has canceled the license of Durga Co-operative Urban Bank. The bank lacked adequate capital and the earning potential in the future was also low. Therefore the license of the bank has been cancelled. The bank has been instructed to close business from November 12, 2024.
According to the order of RBI, due to cancellation of the license of the bank, about 4 percent of its customers may suffer loss. However, the good news is that this decision will not affect 95.8 percent customers. They will get their money deposited in the bank in full. The work of returning their deposits will be done by the Deposit Insurance and Credit Guarantee Corporation (DICGC). People in the country get insurance protection on their total deposits in banks up to Rs 5 lakh.
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In its order, RBI has requested the Cooperative Commissioner of Andhra Pradesh and the Registrar of Cooperative Societies to close the bank. Not only this, these institutions have also been asked to appoint a liquidation officer to close the bank.
The possibility of closure of this bank had already been predicted. Therefore, DICGC had paid Rs 9.84 crore of the total insured deposits by August 31, 2024. Regarding cancellation of the license of Durga Cooperative Urban Bank, RBI said that the bank could not follow the rules of Banking Regulation Act-1949. Therefore, using his powers, he has canceled the license of the bank.
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