The Reserve Bank of India (RBI) has cancelled license of Davangere-Karnataka-based Millath Co-operative Bank Ltd due to inadequate capital and lack of earning prospects.
RBI says, “Millath Co-operative Bank does not have adequate capital and earning prospects. As such, 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 Bank has failed to comply with the requirements of Sections 22(3) (a), 22 (3) (b), 22(3)(c), 22(3) (d) and 22(3)(e) read with Section 56 of the Banking Regulation Act, 1949.”
“The continuance of Millath Co-operative Bank is prejudicial to the interests of its depositors,” RBI says, adding, “The Bank with its present financial position would be unable to pay its present depositors in full and public interest would be adversely affected if the Bank is allowed to carry on its banking business any further.”
RBI has asked the Registrar of Cooperative Societies in Karnataka to issue an order for winding up the Bank and appoint a liquidator for the Bank.
RBI has further added that on liquidation, every depositor would be entitled to receive deposit insurance claim amount of her deposits up to a monetary ceiling of Rs5 lakh from Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of DICGC Act, 1961.
As per the data submitted by the Bank, all the depositors will receive full amount of their deposits from DICGC.
As of 18 May 2022, DICGC has already paid Rs10.38 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961 based on the willingness received from the concerned depositors of the Bank, RBI says.