The central bank of India, RBI on the 24th of December stated that it had revoked the banking license issued by Subhadra Local Area Bank Ltd, Kolhapur, citing problems with the way the bank was run.
The license was canceled under Section 22 (4) of the Banking Regulation Act, 1949 and an order has been made since the closure of the business on December 24, 2020, the RBI said. Explaining the move, the RBI said the cancellation was due to the news that Subhadra Bank was operating in a way that harmed the interests of its current and future investors. The public interest could be undermined if they were allowed to continue doing business the way they did, the RBI said.
Also, the general management of the management is considered to be in favor of current and future depositors and the bank has violated the minimum required amount for the two quarters of the 2019-20 financial year, the RBI said.
So now as the end result, Subhadra Local Area Bank Ltd has been barred from conducting ‘banking’ business as defined in Section 5 (b) any additional business contemplated.
The RBI will apply for closure before the Supreme Court. On December 8, the RBI said it had revoked the license of The Karad Janata Sahakari Bank Ltd, Karad, Maharashtra. The bank has been subject to all-inclusive guidelines as of November 7, 2017.
In the case of a suspension, every investor is entitled to pay up to a maximum of Rs 5,00,000 from the Insurance Deposit and Credit Assurance (DICGC) following the general terms and conditions. More than 99 percent of investors in the Karad bank will receive the full payment of their deposit at DICGC, the RBI said.
In May this year, the RBI canceled the license of CKP Cooperative Bank, another Maharashtra-based co-operative bank which said the bank’s financial situation was dire and unstable.
The poor financial situation was one of the many reasons for the cancellation. The bank, according to the RBI, also had no concrete renewal plan or proposal to merge with another bank.