The Reserve Bank of India (RBI) cancelled the licence of Osmanabad (Maharashtra)-based Vasantdada Nagari Sahakari Bank Ltd.to carry on banking business with immediate effect under Section 22(1) read with Section 56 of Banking Regulation (BR) Act, 1949.

• The apex bank has also requested the Commissioner for Cooperation and Registrar of Cooperative Societies (RCS), Maharashtra to issue an order for winding up the bank and appoint a liquidator for the bank.

What is Banking Business as per BR ACT?

It is a business done by banks that includes acceptance of deposits and repayment of deposits as defined in Section 5(b) read with Section 56 of the Banking Regulation Act, 1949.

Reason for cancellation of Vasantdada Nagari Sahakari Bank Ltd:

The bank has failed to comply with the requirements of Section 11(1) read with Section 56 of Banking Regulation (BR) Act, 1949 and Section 22(3) (a), 22(3) (b), 22(3) (c), 22(3) (d) and 22(3) (e) of BR Act.

• This decision has been taken to protect the interest of depositors as the present financial position would be unable to pay its present depositors in full.

Is consumer Interest Protected?

Yes, with the cancellation of licence, the process of paying to the depositors of banks will be initiated under DICGC (Deposit Insurance and Credit Guarantee Corporation) Act, 1961. Every depositor is entitled to repayment of his/her deposits up to Rs 5,00,000 from the DICGC. More than 99% of the depositors of the bank will get full repayment of their deposits from DICGC.

About Deposit Insurance and Credit Guarantee Corporation:

Establishment– 1978

Chairman– Michael Debabrata Patra (Deputy Governor, RBI)

Headquarter– Mumbai, Maharashtra