Maharashtra's Laxmi Co-operative Bank's licence cancelled, depositors can claim up to Rs 5 lakh

Maharashtra: Reserve Bank of India (RBI) has cancelled the licence of “The Laxmi Co-operative Bank Limited, Solapur, Maharashtra” with the effect from September 22, 2022. RBI said the bank didn't have adequate capital and earning prospect and it would be harmful for public interest if the bank is allowed to carry on its operations. Depositor can claim their credit up to 5 lakh on liquidation of the cooperative bank.

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“Consequent to the cancellation of its licence, “The Laxmi Co-operative Bank Limited, Solapur, Maharashtra” is prohibited from conducting the business of ‘banking’ which includes, among other things, 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.” said the RBI circular.

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RBI in its circular has requested the Commissioner for Cooperation and Registrar of cooperative societies, Maharashtra to issue an order for winding up the bank and appoint a liquidator for the bank.  

Moreover, RBI circular mentioned that the bank didn’t have adequate capital and earning prospects. Besides, it didn’t comply with the some provisions of the Banking Regulation Act, 1949. The bank with its present financial position would be unable to pay its present depositors in full and public interest would be adversely affected if the bank is allowed to carry on its banking business any further, it added.

The circular said that every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5 lakh from Deposit Insurance and Credit Gurantee Corporation (DICGC).