RBI cancels licence of 2 co-op banks including Tumkur-based Sri Sharada Mahila Co-op Bank

Mumbai: The RBI on Tuesday cancelled the licence of two cooperative banks — Sri Sharada Mahila Co-operative Bank, Tumkur, Karnataka and Harihareshwar Sahakari Bank, Wai, Satara — as the lenders do not have adequate capital and earning prospects.

Harihareshwar Sahakari Bank ceases to carry on banking business, with effect from the close of business on July 11, 2023, the Reserve Bank of India (RBI) said in a statement.

About 99.96 per cent of the depositors of Harihareshwar Sahakari Bank are entitled to receive the full amount of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC).

In the case of Sri Sharada Mahila Co-operative Bank, about 97.82 per cent of the depositors are entitled to receive the full amount of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC).

On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits of up to Rs 5 lakh from DICGC.

Consequent to the cancellation of their licences, the banks have been prohibited from conducting the business of ‘banking’ which includes, acceptance of deposits and repayment of deposits, among other things.

While cancelling the licence, the RBI said cooperative banks do not have adequate capital and earning prospects.

Also, the banks with their present financial position would be unable to pay their present depositors in full, it added.

As on March 8, 2023, DICGC has already paid Rs 57.24 crore of the total insured deposits of the bank.

As on June 12, 2023, DICGC has already paid Rs 15.06 crore of the total insured deposits to the depositors of Sri Sharada Mahila Co-operative Bank.

The Commissioner for Co-operation and Registrar of Cooperative Societies, Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank, the RBI added.