RBI cancels licence of Bhagyodaya Friends Urban Co-operative Bank
Reserve Bank of India has recently cancelled the banking licence of Maharashtra-based Bhagyodaya Friends Urban Co-operative Bank Ltd. for failing to garner adequate capital and with no prospects of earning for the lender. Almost 98% of the depositors and customers of Bhagyodaya Friends Urban Co-operative Bank are eligible to receive full amount from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
As per the statement of RBI, more than 98% of the depositors will receive full amounts of their deposits from DICGC. 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 lakh from the DICGC subject to the provisions of the DICGC Act, 1961.
The bank was under ‘all-inclusive directions’ since January 17, 2019. RBI has also directed the state commissioner for cooperation and registrar of cooperative societies to issue an order for winding up and appointing a liquidator for the bank.
RBI, in a recent release, stated, “The 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 section 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.”
With the cancellation of licence, liquidation proceedings will commence and the process of paying depositors of Bhagyodaya Friends Urban Co-operative Bank would be set in motion.
