Business
RBI Initiates Closure Process for Phaltan-Based Co-operative Bank
The Reserve Bank of India has cancelled the licence of The Yashwant Co-operative Bank citing inadequate capital and weak earning prospects. The central bank has also initiated steps for winding up the bank, while assuring depositors that eligible deposits up to Rs 5 lakh will be protected under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme.
The Reserve Bank of India (RBI) on Tuesday announced the cancellation of the banking licence of The Yashwant Co-operative Bank due to concerns regarding the lender’s financial position and future viability.
In an official statement, the RBI said the bank does not possess adequate capital and lacks sustainable earning prospects, making it unsuitable to continue banking operations.
Following the cancellation of the licence, the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra, has been requested to issue an order for winding up the bank and appoint a liquidator to oversee the process.
The RBI stated that after the licence cancellation takes effect, the co-operative bank will cease to carry out banking activities, including accepting and repaying deposits.
The central bank, however, assured depositors that their eligible deposits remain protected under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme. Under the existing deposit insurance framework, every depositor is entitled to receive insurance coverage of up to Rs 5 lakh.
According to RBI norms, DICGC insurance covers both principal and interest amounts held by depositors within the specified limit.
The action forms part of the RBI’s regulatory oversight aimed at safeguarding the interests of depositors and maintaining stability in the banking sector. The central bank periodically reviews the financial health of cooperative banks and takes corrective measures where necessary.
Officials indicated that the winding-up process and settlement of insured deposits will proceed as per applicable banking and cooperative society regulations.
Key Details
| Detail | Information |
|---|---|
| Bank | The Yashwant Co-operative Bank |
| Location | Phaltan, Maharashtra |
| Action Taken | RBI cancelled banking licence |
| Reason | Inadequate capital and weak earning prospects |
| Depositor Insurance | Up to Rs 5 lakh via DICGC |
| Next Step | Winding up and appointment of liquidator |