RBI Cancels Laxmi Co-Operative Bank's License; Depositors Can Claim Up To Rs 5 Lakh

The Reserve Bank of India (RBI) on Thursday canceled the license of Lakshmi Co-operative Bank based in Maharashtra. The reason behind this has been attributed by the central bank to lack of adequate capital.

On liquidation, every depositor will be able to get a deposit insurance claim amount up to Rs 5 lakh under the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961. According to RBI, the bank will not be able to make payments to its depositors in its current financial position. The central bank said that if the bank is allowed to work further, which will adversely affect the interest of the people.

RBI said in a statement that it has canceled the license of the bank, as the lender does not have sufficient capital. The expectation of earning and further functioning of the bank is in the interest of the depositors.

Earlier, RBI has imposed a fine on 8 co-operative banks simultaneously last month. There is also a bank Visakhapatnam Co-operative Bank on which RBI has imposed a fine of Rs 55 lakh. All these banks are accused of laxity in rules and not following the instructions. The Reserve Bank keeps on taking such action from time to time and warns the banks about the guidelines given.