This Bank Will Shut Down, What Happens to Account Holder's Money?

The Reserve Bank of India (RBI) cancelled the licence of Pune-based Rupee Co-operative Bank Ltd last month. The central bank's policy will come into effect today. "As a result, the bank would cease to carry out banking business as of September 22, 2022," the RBI announced on August 10. Following the cancellation of its licence, 'Rupee Co-operative Bank Ltd, Pune' is barred from undertaking banking operations, including, among other things, accepting deposits and repaying deposits, with effect from September 22, 2022, it added.

Why did RBI cancel the licence of Rupee Co-operative Bank in Pune?

The licence was cancalled because the bank lacked appropriate capital and earning potential, and so could not comply with certain sections of the Banking Regulation Act of 1949.

It violates Sections 11(1) and 22(3)(d) of the Banking Regulation Act of 1949, as well as Section 56 of the Act. The bank failed to comply with the requirements of Sections 22(3)(a), 22(3)(b), 22(3)(c), 22(3)(d), and 22(3)(e) of the Banking Regulation Act, 1949, as well as Section 56.

"With its current financial status, the bank would be unable to pay its current depositors in full," the RBI stated, adding that the continuance of the bank is prejudicial to the interests of its depositors.

What happens to the account holders' money?

According to the cooperative bank's data, more than 99 percent of depositors are entitled to receive the full amount of their deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC). DICGC had already paid out 700.44 crore of the total insured deposits as of May 18, 2022.