RBI Takes Decisive Action: Revokes Banking Licenses of The Botad Peoples Co-operative Bank and Adarsh Mahila Nagari Sahakari Bank

In a significant regulatory move, the Reserve Bank of India (RBI) has canceled the banking licenses of The Botad Peoples Co-operative Bank and Adarsh Mahila Nagari Sahakari Bank Maryadit. The immediate effect of this action is a transformation of The Botad Peoples Co-operative Bank into a non-banking institution, necessitating the halt of all banking activities, including the acceptance of deposits from non-members. Additionally, the RBI has mandated that the bank must ensure the repayment of unpaid and unclaimed deposits of non-members upon demand.

Simultaneously, the RBI has canceled the license of Adarsh Mahila Nagari Sahakari Bank Maryadit, citing multiple factors, including inadequate capital, non-compliance with various sections of the banking regulation act, and a determination that the bank’s continuation is prejudicial to the interests of its depositors.

For The Botad Peoples Co-operative Bank, the RBI’s directive extends to the requirement of repaying unpaid and unclaimed deposits of non-members on demand, even after the bank’s reclassification as a non-banking institution. The central bank’s stringent actions emphasize the need for prompt and effective regulatory measures to safeguard depositors’ interests and maintain the stability of the financial sector.

In a separate development, the RBI has called for the winding up of Adarsh Mahila Nagari Sahakari Bank Maryadit and the appointment of a liquidator. The decision is grounded in concerns over the bank’s financial position, its inability to meet its present depositors’ obligations, and the potential adverse impact on public interest if it continues its banking operations.

Importantly, the RBI highlights that upon liquidation, every depositor will be entitled to receive a deposit insurance claim amount of their deposits, up to a monetary ceiling of Rs 5,00,000, from the Deposit Insurance and Credit Guarantee Corporation (DICGC). This move underscores the central bank’s commitment to protecting depositors and maintaining the integrity of the banking system.

As of October 31, the DICGC has already disbursed Rs 185.38 crore of the total insured deposits, based on the willingness received from the depositors of Adarsh Mahila Nagari Sahakari Bank Maryadit. This aligns with the RBI’s broader objectives of maintaining financial stability, ensuring adherence to regulatory standards, and safeguarding the interests of depositors within the banking sector.