The Reserve Bank of India (RBI) today cancelled the licence of Maharashtra's Laxmi Co-operative Bank Limited, saying the Solapur-based lender does not have adequate capital and earning prospects and and it does not comply with regulations.
The order will be effective from today itself.
The RBI in a statement said, "The Laxmi Co-operative Bank Limited, Solapur, Maharashtra is prohibited from conducting the business of 'banking' which includes, among other things, acceptance of deposits and repayment of deposits as defined in Section 5(b) read with Section 56 of the Banking Regulation Act, 1949 with immediate effect."
The RBI told the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra to issue an order for winding up the bank and appoint a liquidator for the bank.
It said that on liquidation, every depositor would be entitled to receive a deposit insurance claim amount up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation, or DICGC.
As per the data submitted by the bank, 99 per cent of the depositors are entitled to receive the full amount of their deposits from DICGC.