In a significant move, the Reserve Bank of India (RBI) has decided to cancel the banking licenses of two cooperative banks operating in Maharashtra and Karnataka. The Malkapur Urban Co-operative Bank Ltd., based in Buldhana, and the Shushruti Souharda Sahakara Bank Niyamita, located in Bengaluru, are the banks affected by this regulatory action. Effective from Wednesday, these banks are prohibited from conducting any banking operations.
The RBI’s decision to cancel the licenses stems from concerns regarding insufficient capital and limited income potential in these cooperative banks. As a result of this development, the affected banks will no longer be able to offer banking services to their customers starting from Thursday, July 6.
The cancellation of these licenses raises questions about the safety of keeping money in cooperative banks. Reports indicate that in the event of a bank’s failure or bankruptcy, depositors can seek relief through the insurance coverage provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC). Currently, DICGC offers insurance coverage of up to Rs 5 lakh. However, it is essential for depositors to register for this facility and pay the insurance premium.
The Malkapur Urban Co-operative Bank provided the information that the RBI used to determine that 97.60 percper centdepositors are qualified to receive their entire deposits from DICGC. A total of Rs. 496.98 crore of the insured deposits have already been paid out by DICGC. Similar to this, the RBI has stated that 91.92 per cent of depositors in the Shushruti Souharda Sahakara Bank Niyamita are entitled to receive the full amount of their deposits from DICGC.
It’s crucial to keep in mind that DICGC’s Deposit Insurance covers a range of deposit types, including savings accounts, fixed deposits (FDs), current accounts, and recurring deposits (RDs). All insured commercial banks, including LAB, PB, SFB, RRB, and cooperative banks, are covered by insurance by DICGC. To verify whether your bank is registered for deposit insurance, you can visit the following link:(https://www.dicgc.org.in/FD_ListOfInsuredBanks.html).
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