The Reserve Bank of India (RBI) has taken decisive action by canceling the license of Shankarrao Pujari Nutan Nagari Sahakari Bank Limited, based in Kolhapur. The apex bank has directed the co-operative bank to cease all banking activities with immediate effect, effective from the close of business on December 4, 2023.
The RBI highlighted that the decision was prompted by the bank’s inadequate capital and earning prospects, leading to non-compliance with the provisions of Section 11(1) and Section 22 (3) (d) read with Section 56 of the Banking Regulation Act, 1949. The co-operative bank has also failed to adhere to certain sections of the Banking Regulation Act, 1949.
According to the RBI, allowing Shankarrao Pujari Nutan Nagari Sahakari Bank to continue its banking business would adversely affect public interest, as the bank’s current financial position raises concerns about its ability to repay depositors in full.
In the event of liquidation, the RBI assured depositors that every account holder would be entitled to receive a deposit insurance claim amount for their deposits, up to a monetary ceiling of ₹5,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC), in accordance with the DICGC Act, 1961. As per the bank’s data, 99.85% of depositors are eligible to receive the full amount of their deposits from DICGC.
The RBI disclosed that as of July 24, DICGC had already disbursed ₹41.60 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961. This payment was made based on the willingness expressed by the concerned depositors of the bank.
As part of the regulatory measures, the RBI has directed the Commissioner for Cooperation and Registrar Cooperative Societies, Maharashtra, to issue an order for the winding-up of the bank and appoint a liquidator to oversee the process.
This action against Shankarrao Pujari Nutan Nagari Sahakari Bank comes on the same day the RBI imposed monetary penalties on four other co-operative banks – Jijamata Mahila Sahakari Bank Ltd, Shri Laxmikrupa Urban Co-operative Bank Ltd, The Konark Urban Cooperative Bank Ltd, and The Chembur Nagarik Sahakari Bank Ltd – for regulatory compliance deficiencies. These coordinated regulatory moves emphasize the central bank’s commitment to maintaining the integrity and stability of the banking sector in India.