The Millath Co-operative Bank’s licence was cancelled by the RBI. All depositors are to receive their money.
- The RBI cancels karnataka lender Millath Co-operative Bank’s licence.
- The bank lacked adequate capital and earning prospects, thus being deemed to be adversely affecting the public interest.
- All depositors are to receive the full amount of their deposits.
The Reserve Bank of India (RBI) has cancelled the licence of Millath Co-operative Bank Limited. The bank is based in Davangere, Karnataka. According to the data submitted by the bank, all the depositors will receive the full amount of their deposits from DICGC.
Millath Cooperative Bank lacks adequate capital and earning prospects. Furthermore, it does not comply with the provisions of Section 11 (1) and Section 22 (3) d read with Section 56 of the Banking Regulation Act, 1949. The RBI added that the bank, with its present financial position, would not be able to pay its present depositors in full. It was thus concluded that allowing it to continue its banking business any further was at odds with the highest interests of depositors.
Claims of the Depositors
The RBI released a statement to the press. As of 18th May, 2022, the Deposit Insurance and Credit Guarantee Corporation (DICGC) has paid Rs 10.38 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961. This was based on the willingness given by the concerned depositors of the bank.
“The Registrar of Co-operative Societies, Karnataka, has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank,” the RBI informed in the press release.
Consequently, as announced by the RBI, the bank ceases to carry on banking business, with effect from the close of business on June 18, 2022. On liquidation, every depositor would be entitled to receive a deposit insurance claim amount up to a monetary ceiling of Rs. 5,00,000 only from the DICGC.
Keeping in view the public interest, the RBI cancelled Millath Co-operative Bank’s licence, with effect from June 18, 2022. Every depositor would be entitled to receive their full amount of their deposit.