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RBI cancels licence of Goa-based The Madgaum Urban Cooperative Bank; bars it from conducting ‘banking’ operations

RBI cancels licence of Goa-based The Madgaum Urban Cooperative Bank; bars it from conducting ‘banking’ operations

RBI says about 99 per cent of depositors will receive full amounts of their deposits from Deposit Insurance and Credit Guarantee Corporation

The Reserve Bank said it has cancelled the licence of the bank as it does not have adequate capital and earning prospects The Reserve Bank said it has cancelled the licence of the bank as it does not have adequate capital and earning prospects

The Reserve Bank of India (RBI) has cancelled the licence of The Madgaum Urban Co-operative Bank Limited, Margao, Goa. The bank ceases to carry on banking business, with effect from the close of business on July 29, 2021. The Office of Registrar of Cooperative Societies, Goa, has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.

The RBI has assured that about 99 per cent of the depositors will receive full amounts of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC).

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"On liquidation, every depositor will be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5,00,000 from the DICGC, subject to the provisions of the DICGC Act, 1961," the RBI said.

The Reserve Bank said it has cancelled the licence of the bank as it does not have adequate capital and earning prospects. As per the RBI, the continuance of the bank is prejudicial to the interests of its depositors, and that the bank with its present financial position, would be unable to pay its present depositors in full. The RBI also said public interest would be adversely affected if it is allowed to carry on its banking business any further.

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"As such, it does not comply with the provisions of section 11(1) and section 22 (3) (d) read with section 56 of the Banking Regulation Act, 1949," an RBI statement said.

The bank is now prohibited from conducting the business of ‘banking’, which includes acceptance of deposits and repayment of deposits, the RBI said. "With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of The Madgaum Urban Co-operative Bank Limited, Margao, Goa as per the DICGC Act, 1961 will be set in motion," it said.

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