RBI Cancels Shimsha Sahakara Bank License: Depositors Protected

Mumbai, Jul 5 (PTI) The RBI has cancelled the licence of Shimsha Sahakara Bank Niyamitha, Maddur (Karnataka) in the wake of its worsening financial position.

Consequently, the bank ceases to carry on banking business, with effect from the close of business on Friday (July 05, 2024), the Reserve Bank said in a statement.

The Registrar of Cooperative Societies, Karnataka has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.

On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to Rs 5 lakh from Deposit Insurance and Credit Guarantee Corporation (DICGC).

As per the data submitted by the bank, RBI said about 99.96 per cent of the depositors are entitled to receive the full amount of their deposits from the DICGC.

Giving details, RBI further said the bank does not have adequate capital and earning prospects, and its continuance is prejudicial to the interests of its depositors.

"The bank with its present financial position would be unable to pay its present depositors in full," it added.

As on March 31, 2024, DICGC has already paid Rs 11.85 crore of the total insured deposits based on the willingness received from the concerned depositors of the bank.