RBI cancels licence of Shree Mahalaxmi Urban Co-operative Credit Bank

The Reserve Bank has cancelled the licence of Karnataka-based Shree Mahalaxmi Urban Co-operative Credit Bank due to its worsening financial position. The Registrar of Co-operative Societies, Karnataka, has also been requested to issue an order for winding up the bank and appoint a liquidator, the Reserve Bank of India (RBI) said in a statement on Thursday.

On liquidation, about 97.9 per cent of depositors would receive full amount of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC). Giving reasons for cancellation of the licence, the RBI said the lender does not have adequate capital and earning prospects and does not comply with certain provisions of the Banking Regulation Act, 1949. “The bank with its present financial position would be unable to pay its present depositors in full,” it said, and added continuation of the bank will be prejudicial to the interests of its depositors.

Consequent to the cancellation of its licence, Shree Mahalaxmi Urban Co-operative Credit Bank, located in Gokak (Karnataka), has been prohibited from conducting the business of ‘banking’ which includes, among other things, acceptance of deposits and repayment of deposits, from Thursday.