The Reserve Bank of India (RBI) has canceled the license of Maharashtra-based The Lakshmi Co-operative Bank, citing a lack of adequate capital. Also, each depositor will be entitled to receive deposits up to Rs 5 lakh. According to RBI the bank with its current financial position will be unable to make full payments to its existing depositors and public interest will be adversely affected if the bank is allowed to continue. RBI said in a statement that the bank's license was canceled as the lender does not have sufficient capital and earning potential and the continuity of the bank is prejudicial to the interests of its depositors.
The central bank said that every depositor would be entitled to receive a deposit insurance claim amount from the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to a monetary limit of Rs 5 lakh, subject to the provisions of the DICGC Act 1961. The Cooperative Commissioner and Registrar of Cooperative Societies, Maharashtra have also been asked to issue an order to cease operations and appoint a liquidator for the bank. Announcing the cancellation of the bank's license, the central bank had said that as per the details given by the bank, 95 percent of the depositors would get the entire deposit amount through deposit insurance and loan guarantee.
Lakshmi Co-Operative Bank is not the only bank in Maharashtra whose license has been canceled. Earlier last year, the Reserve Bank had canceled the license of Kanrala Nagari Cooperative Bank, Panvel in Maharashtra.