Reserve Bank of India has cancelled the licence of Vasantdada Nagari Sahakari Bank on Monday citing failure to meet regulatory requirements. The central bank barred the Osmanabad-headquartered urban co-operative bank from undertaking banking business with effect from the close of business on January 11, 2021.
The Commissioner for Cooperation and Registrar of Cooperative Societies (RCS), Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank, RBI said in a statement on Monday.
RBI said Vasantdada Nagari Sahakari Bank failed to comply with requirements mandated in Banking Regulation Act. The apex bank added that the co-operative lender has become disentitled to carry on the business of banking in India, because of the cancellation of its licence issued to it.
The banking regulator noted that continuance of the bank is prejudicial to the interests of its depositors, and it would be unable to pay its present depositors in full in its present financial position.
"It is necessary in public interest and for preventing the affairs of the bank being conducted in a manner detrimental to the interests of its depositors to wind up the affairs of the bank," RBI said.
"Consequent to the cancellation of its licence, Vasantdada Nagari Sahakari Bank Ltd., Osmanabad, Maharashtra is prohibited from conducting the business of 'banking' which includes acceptance of deposits and repayment of deposits as defined in Section 5(b) read with Section 56 of the Banking Regulation Act, 1949 with immediate effect," it further added.
With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of Vasantdada Nagari Sahakari Bank as per the DICGC Act will be set in motion. More than 99 per cent of depositors of the bank will get full repayment of their deposits, RBI said.
On liquidation, depositors are entitled to repayment of their deposits up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per usual terms and conditions.