The Reserve Bank of India (RBI) has cancelled the licence of Sarvodaya Cooperative Bank with immediate effect, citing the bank's inability to meet its financial obligations and comply with regulatory norms. The decision was taken under Section 56 of the Banking Regulation Act, 1949, read with Section 22 thereof.
Impact on Customers
Customers of the bank will be entitled to receive their deposits up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC). The insurance cover is per depositor per bank, and the amount will be paid within 90 days from the date of cancellation. For deposits exceeding Rs 5 lakh, depositors may have to wait for the liquidation process to recover their money.
Why Was the Licence Cancelled?
The RBI found that the bank had inadequate capital, poor asset quality, and was unable to pay its depositors in full. The bank also failed to submit a viable revival plan. The regulator stated that continuing the bank's operations would be detrimental to the interests of depositors.
What Happens Next?
With the cancellation, the bank ceases to carry on banking business, including acceptance of deposits and repayment of deposits. The RBI has appointed a liquidator to handle the bank's affairs. The liquidator will verify claims and distribute assets among depositors and creditors as per law.
Customers are advised to contact the liquidator for any queries regarding their deposits. The RBI has assured that every effort will be made to ensure depositors get their insured amount at the earliest.
