The Reserve Bank of India (RBI) has just taken two steps back. This week, three banks’ licences were revoked. In addition, numerous banks have been hit with fines.
The Reserve Bank of India consistently prosecutes banks. The licence of Ananthashayanam Co-operative Bank Limited, Trivandrum, was declared to be revoked on September 21. The licences of two further banks have now also been revoked by the Central Bank. Their banking operations are no longer allowed.
If banks are permitted to go on with their banking operations, it would have an impact on the public interest, claims the RBI. These banks’ names are National Co-operative Bank Limited (Bahraich, UP) and Mallikarjuna Pattana Co-operative Bank Niamita (Maskhi, Karnataka).
That is the cause.
According to the RBI, these banks don’t have enough capital or earning potential. As a result, none of these banks complied with the requirements of Sections 56, 11(1), and 22(3)(D) of the Banking Regulation Act of 1949. Additionally, due to its financial situation, this bank is unable to repay all of its present depositors in full. These have also been recognised as damaging to depositor interests by the Central Bank.
A ban on banking operations will have an impact on consumers.
Beginning on September 22, the Reserve Bank would no longer allow Mallikarjun Pattana Co-operative Bank Niamita and National Co-operative Bank Limited to conduct banking operations. Accepting deposits and returning deposits are also among them. Each depositor would be permitted to withdraw up to Rs 5 lakh of their savings in accordance with the norms of the Deposit Insurance and Credit Guarantee Corporation (DICGC).
