Maharashtra: RBI Revokes License of The Malkapur Urban Co-operative Bank in Buldhana

Buldhana, 6th July 2023: In a significant development, the Reserve Bank of India (RBI) has taken the decision to cancel the license of The Malkapur Urban Co-operative Bank Limited located in Buldhana, Maharashtra. This decision, communicated through an official order issued on July 4, 2023, effectively terminates the bank’s operations, effective from the close of business on July 5, 2023. To facilitate the bank’s winding up process, the Commissioner for Cooperation and Registrar of Cooperative Societies in Maharashtra has been requested to appoint a liquidator.

The RBI’s decision to revoke the license of The Malkapur Urban Co-operative Bank Limited stems from several crucial factors. Firstly, the bank has been found to lack sufficient capital and viable earning prospects, rendering it non-compliant with the provisions of the Banking Regulation Act, 1949, specifically Sections 11(1) and 22(3)(d) read with Section 56. Additionally, the bank has failed to meet the requirements outlined in Sections 22(3)(a), 22(3)(b), 22(3)(c), 22(3)(d), and 22(3)(e) of the Banking Regulation Act, 1949, further justifying the cancellation of its license.

Furthermore, the RBI concluded that the bank’s continuation poses a risk to the interests of its depositors, as its current financial condition would impede the full repayment of their deposits. Additionally, allowing the bank to continue its banking operations would have adverse consequences for the public interest.

With the immediate cancellation of its license, The Malkapur Urban Co-operative Bank Limited is prohibited from engaging in any banking activities, including accepting and repaying deposits, as defined by Section 5(b) read with Section 56 of the Banking Regulation Act, 1949.

In the event of liquidation, depositors will be eligible to receive their deposit insurance claim amount from the Deposit Insurance and Credit Guarantee Corporation (DICGC), up to a maximum limit of ₹5,00,000/- (Rupees five lakh only). Remarkably, as per the bank’s data, a significant majority of depositors, amounting to 97.60%, are entitled to receive the full amount of their deposits from DICGC. In line with this, DICGC has already disbursed ₹496.98 crore to insured depositors under the provisions of the DICGC Act, 1961, based on the willingness expressed by the concerned depositors.