(PTI) The Reserve Bank has cancelled the licence of The Mudhol Co-operative Bank Limited, Bagalkot (Karnataka), thus restricting it from repayment of deposits and acceptance of fresh funds.
The bank does not have adequate capital and earning prospects, the Reserve Bank of India (RBI) said on Wednesday while announcing the cancellation of licence.
"Consequent to the cancellation of its licence, The Mudhol Co-operative Bank Limited ... is prohibited from conducting the business of 'banking' which includes, among other things, acceptance of deposits and repayment of deposits," it said.
RBI also said that bank with its present financial position would be unable to pay its present depositors in full.
The cancellation of licence comes into effect from Wednesday.
As per the data submitted by the bank, RBI said more than 99 per cent of the depositors are entitled to receive full amount of their deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
On liquidation, every depositor would be entitled to receive deposit insurance claim amount up to ₹5 lakh from the DICGC.
DICGC has already paid ₹16.69 crore of the total insured deposits based on the willingness received from the concerned depositors of the bank, the RBI added.