The Reserve Bank of India cancelled the licence of The Hiriyur Urban Co-operative Bank Ltd in Karnataka, on January 12.
“The (RBI), vide order dated January 12, 2024, has cancelled the licence of “The Hiriyur Urban Co-operative Bank Ltd., Hiriyur”. Consequently, the bank ceases to hold on banking enterprise, with effect from the shut of enterprise on January 12, 2024,’‘ said a bank statement.
Accordingly, the Registrar of Cooperative Societies, Karnataka has also been requested to issue an order for winding up the bank. and appoint a liquidator for the bank.
Hiriyur Urban Co-operative Bank does not have adequate capital and earning prospects. As such, it does not comply with the provisions of Section 11(1) and Section 22 (3)(d) read with Section 56 of the Banking Regulation Act, 1949, as per RBI.
Also, the bank has failed to comply with the requirements of Sections 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 continuance of the bank is prejudicial to the interests of its depositors. The bank with its present financial position would be unable to pay its present depositors in full; and Public interest would be adversely affected if the bank is allowed to carry on its banking business any further,’‘ the apex bank stated.
Consequent to the cancellation of its licence, The Hiriyur Urban Co-operative Bank Ltd (Hiriyur) is prohibited from conducting the business of ‘banking’ which incorporates, amongst different issues, acceptance of deposits and reimbursement of deposits as outlined in Section 5(b) learn with Section 56 of the Banking Regulation Act, 1949 with immediate effect,’‘in keeping with RBI communique launched by Yogesh Dayal, Chief General Manager of RBI.
On liquidation, each depositor can be entitled to obtain deposit insurance coverage declare quantity of his/her deposits as much as a financial ceiling of ₹5,00,000/- (Rupees 5 lakh solely) from Deposit Insurance and Credit Guarantee Corporation (DICGC) topic to the provisions of DICGC Act, 1961. As per the information submitted by the bank, 99.93% of the depositors are entitled to obtain the total quantity of their deposits from DICGC. As on September 30, 2023 DICGC has already paid ₹224.53 lakh of the whole insured deposits underneath the provisions of Section 18A of the DICGC Act, 1961 primarily based on the willingness obtained from the involved depositors of the bank.
