In August 2021, the Reserve Bank of India (RBI) cancelled the license of Karnala Nagari Sahakari Bank Ltd., Panvel, Maharashtra, due to the bank not having Adequate capital and earning prospects To pay its present depositors in full.
i.Along with the license cancellation, the
bank is also prohibited from conducting
the ‘banking’ business (including
acceptance of deposits and repayment
of deposits) as defined in Section 56 of
the Banking Regulation (BR) Act, 1949.
ii.Cause for License cancellation:
•The bank did not comply with the
provisions of section 11(1) and
section 22 (3) (d) read with section 56
of the BR Act, 1949.
It also failed to follow the Requirements of section 22 (3) (a), 22 (3) (b), 22 (3) (c), 22 (3) (d) and 22 (3) € read with section 56 of the BR Act, 1949
ii. The Commissioner for Cooperation
and Registrar of Cooperative Societies
(CC &RCS), Maharashtra will issue an
Order for winding up the bank and appoint A liquidator for the bank.
iv.Paying back the depositors (Under
DICGC Act, 1961): After Liquidation, every Depositor of the bank would receive a Deposit insurance claim amount of His/her deposits in the bank up to a Monetary ceiling of Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC) (as per the Provisions of the DICGC Act, 1961).
About Banking Regulation (BR) Act 1949
i.lt has a total of 56 sections.
ii. Section 22: Every Banking Company in India needs to obtain a license from RBI Under this section to start a banking Business.
•RBI will cancel the license granted to a Banking company under Section 22(4) Of the BR Act.
iii. Section 47 A: Provisions under this section empowers RBI to impose a penalty.