RBI cancels licence of MP-based Garha Co-operative Bank

The Reserve Bank of India (RBI) on Monday cancelled licence of Garha Co-operative Bank, Guna in Madhya Pradesh as the lender does not have adequate capital and earning prospects.

About 98.4 per cent of the depositors of the co-operative bank are entitled to receive full amount of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC), the RBI said in a statement.

Consequent to the cancellation of its licence, the bank is prohibited from conducting various activities, including acceptance of deposits and repayment of deposits with immediate effect.

"The bank does not have adequate capital and earning prospects," the RBI said while cancelling the licence with effect from the close of business hours on Monday.

Further, it said Garha Co-operative Bank with its present financial position would be unable to pay its present depositors in full.

"On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5,00,000 from DICGC," it added.

As on December 19, 2022, DICGC has already paid Rs 12.37 crore of the total insured deposits based on the willingness received from the concerned depositors of the bank.