RBI revokes Laxmi Co-operative Bank license, says lender lacks capital

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On September 22, the Reserve Bank of India announced that it had canceled The Laxmi Co-operative Bank Limited, based in Solapur, citing the lender as lacking capital and earning prospects.

The bank will cease carrying out its banking activities, effective the close of business on September 22, 2022, the RBI said in a statement. Further, the RBI has requested the Cooperation Commissioner and Registrar of Cooperative Societies of Maharashtra to issue a winding up order for the bank and appoint a liquidator for the bank.

“Today, the Reserve Bank of India (RBI), by an order dated 14th September 2022, has revoked the license of ‘The Laxmi Co-operative Bank Limited, Solapur, Maharashtra’. Accordingly, the bank ceases to carry on its banking business, effective the close of business on September 22, 2022,” the RBI statement read.

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Mentioning the reasons behind the cancellation of the license, the RBI said the bank lacked sufficient capital and revenue prospects. He also said the bank failed to comply with the requirements of Articles 22(3)(a), 22(3)(b), 22(3)(c), 22(3)(d) and 22( 3)(e) read with section 56 of the Banking Regulation Act 1949.

The RBI added that the bank, with its current financial situation, would not be able to pay its current depositors in full and the public interest would be affected.

With this cancellation, The Laxmi Co-operative Bank Limited will no longer be able to carry on the business of “banking” which includes, among other things, the acceptance of deposits and the repayment of deposits.

However, to ensure the safety of customers’ money, each depositor would be entitled to receive the amount of the deposit insurance claim from their deposits up to a monetary cap of 5,00,000 from the Deposit Insurance and Credit Guarantee Company (DIGCC) subject to the provisions of the DICGC Act of 1961.

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