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RBI cancels licence of Madgaum Urban Co-operative Bank Ltd, depositors not to worry

On liquidation, every depositor would be entitled to receive deposit insurance claim amount of their deposits up to a monetary ceiling of Rs 5 lakh only from the DICGC.

SNS | New Delhi |

On Thursday, Reserve Bank of India (RBI) cancelled the licence of The Madgaum Urban Co-operative Bank Limited, Margao, Goa, as the bank with its current financial position would be unable to pay its present depositors in full.

The RBI further said that as per the data submitted by the bank, about 99 per cent of the depositors would receive full amounts of their deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

On liquidation, every depositor would be entitled to receive deposit insurance claim amount of their deposits up to a monetary ceiling of Rs 5 lakh only from the DICGC.

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

The Madgaum Urban Cooperative Bank, the RBI said, does not have adequate capital and earning prospects and has failed to comply with various provisions of the Banking Regulation Act, 1949.

Further, “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 said while cancelling the licence.

“Consequent to the cancellation of its licence, The Madgaum Urban Co-operative Bank Limited, Margao, Goa is prohibited from conducting the business of ‘banking’ which includes acceptance of deposits and repayment of deposits…with immediate effect,” the RBI said.

With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors will be set in motion.