The Reserve Bank of India (RBI) on Sunday said 99.2 per cent of the depositors of The CKP Co-operative Bank Ltd., Mumbai, whose license has been cancelled, will get full payment of their deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC)

As at November-end 2019, CKP Co-op Bank, as per its website, had deposits aggregating Rs 485.56 crore and loans aggregating Rs 161.17 crore. 

According to a tweet by RBI Chief General Manager Yogesh Dayal, “CKP Co-operative Bank has been under All Inclusive Directions of @RBI since 2014. As there was no scope for revival of the bank, its license has been cancelled.

“Out of 132170 depositors of the bank, about 99.2% will get full payment of their deposits from DICGC.”

The RBI, in a statement on Saturday, said the licence of The CKP Co-operative Bank Ltd., Mumbai, has been cancelled with effect from the close of business on April 30, 2020.

Consequent to the cancellation of its licence, the Bank is prohibited from conducting the business of ‘banking’ which includes acceptance of deposits and repayment of deposits as defined in the Banking Regulation Act, 1949 with immediate effect, the central bank said in a statement.

The Registrar of Co-operative Societies, Pune, Maharashtra, has also been requested to issue an order for winding up the affairs of The CKP Co-operative Bank Ltd., Mumbai and appoint a liquidator for the bank, the central bank said in a statement.

Depositors eligible for higher deposit insurance claim

With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of The CKP Co-operative Bank Ltd., Mumbai, as per the DICGC Act, 1961 will be set in motion, it added.

On liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of ₹ 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per usual terms and conditions. 

DICGC, a wholly owned subsidiary of the Reserve Bank of India, had raised the limit of insurance cover for depositors in insured banks from ₹1 lakh to ₹5 lakh per depositor with effect from February 4, 2020 with the approval of Government of India.

Reasons for cancellation

The central bank said it canceled the Bank’s license as “The financial position of the bank is highly adverse and unsustainable. There is no concrete revival plan or proposal for merger with another bank. Credible commitment towards revival from the management is not visible.

“The bank is not satisfying the requirement of minimum capital and reserves…and capital adequacy and earning prospects…and also stipulated minimum regulatory capital requirement of 9 per cent.”

The central bank statement observed that the affairs of the bank were and are being conducted in a manner detrimental to the public interest and interest of the depositors and that the general character of the management of the bank is prejudicial to the interest of depositors as also public interest. Thus, the bank has not been complying with provisions of Section 22 (3)(b) and (c) Banking Regulation Act.

“The bank’s efforts for revival have been far from adequate though the bank has been given ample time and opportunity and dispensations. No merger proposal has been received in respect of the bank. Thus, in all likelihood, public interest would be adversely affected if the bank were allowed to carry on its business any further.

“No useful purpose would be served by allowing the bank to continue as envisaged in Section 22(3)(e) of the Act. Rather, Public interest would be adversely affected if the bank is allowed to carry on its banking business any further,” the RBI said.

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