This bank's LICENCE CANCELLED by RBI! Have account in it? Here is what will happen to depositors' money

In a major action, the RBI on Tuesday said it has cancelled the licence of The Karad Janata Sahakari Bank Ltd, Karad, Maharashtra. The reason cited by RBI behind cancellation is 'the bank does not have adequate capital and earning prospects'.

Giving details, the RBI said the bank was under "all inclusive directions" since November 07, 2017. The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank. The RBI said it cancelled the licence of the bank as it "does not have adequate capital and earning prospects". As such, it does not comply with the relevant provisions of the Banking Regulation Act, 1949.

What will happen to depositors' money?

-More than 99 per cent of the depositors of the bank will get full payment of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC), the Reserve Bank said in a statement.

-With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of The Karad Janata Sahakari Bank will be set in motion.

-On liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of Rs 5 lakh only from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per usual terms and conditions.

Prohibited from banking business

- Consequent to the cancellation of its licence from close of business on December 7, the bank has been prohibited from conducting the business of 'banking' which includes acceptance of deposits and repayment of deposits with immediate effect.

-"The continuance of the bank is prejudicial to the interests of its depositors," RBI said, and added the bank with its present financial position would be unable to pay its present depositors in full.