The Reserve Bank of India (RBI) has taken stringent actions in the interest of depositors this year, canceling the licenses of 11 banks in 2024. While this step was aimed at protecting depositors’ interests, it also impacted customers by limiting their withdrawal amounts. Here’s a detailed look at the banks affected and the reasons behind the cancellations.
Why Were These Licenses Canceled?
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The RBI cited several reasons for revoking the licenses, including:
- Inadequate Capital: These banks lacked sufficient capital to sustain operations.
- Poor Financial Health: Their financial positions were unstable, making it difficult for them to repay depositors.
- Rule Violations: Provisions under the Banking Regulation Act, 1949, were not adhered to.
- Public Interest: The continuation of these banks was deemed harmful to depositors’ interests.
In its official notice, the RBI stated that these banks were unable to meet basic banking obligations and had no scope for earnings improvement, leading to the decision to cancel their licenses.List of Banks Whose Licenses Were Revoked in 2024Durga Co-operative Urban Bank Limited – Vijayawada, Andhra PradeshShri Mahalakshmi Mercantile Co-operative Bank Limited – Dabhoi, GujaratThe Hiriyur Urban Co-operative Bank Limited – Hiriyur, KarnatakaJai Prakash Narayan Nagari Sahakari Bank Limited – Basmathnagar, MaharashtraSumerpur Mercantile Urban Co-operative Bank Limited – Sumerpur, Pali, RajasthanPurvanchal Co-operative Bank Limited – Ghazipur, Uttar PradeshThe City Co-operative Bank Limited – Mumbai, MaharashtraBanaras Mercantile Co-operative Bank Limited – Varanasi, Uttar PradeshShimsha Sahakari Bank Niyamitra – Maddur, Mandya, KarnatakaUravakonda Co-operative Town Bank Limited – Andhra PradeshThe Mahabhairab Co-operative Urban Bank Limited – Tezpur, AssamWhat About the Depositors’ Money?
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According to the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961:
- Insurance Coverage: Depositors of these banks are entitled to receive an insurance claim for deposits up to ₹5 lakh.
- Process: The amount is disbursed under the provisions of the DICGC once a bank’s license is revoked.
While customers face temporary inconvenience, the RBI ensures that depositors can recover their insured amounts up to the stipulated limit.Impact of License Cancellations
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These measures highlight the RBI’s commitment to maintaining the stability of the banking system while safeguarding public interest. However, the actions also emphasize the importance of financial discipline and compliance among banking institutions.
For depositors, it’s a reminder to stay informed about the financial health of the banks they rely on.
