RBI cancels licence of Deccan Urban Co-operative Bank: Here's what depositors need to know

Earlier this week, the Reserve Bank of India (RBI) cancelled the licence of Deccan Urban Co-operative Bank in Karnataka. RBI took the decision as the lender did not have adequate capital and earning prospects, the banking regulator said.

With the cancellation of licence, the Deccan Urban Co-operative Bank ceased its banking business, with effect from the close of business on Thursday (August 18). 

The Commissioner for Cooperation and Registrar of Cooperative Societies, Karnataka will now issue an order for winding up of the bank and will appoint a liquidator for it on the directions of RBI.

What happens to the money of depositors?

With regard to the deposits in the bank, the RBI said that 99 percent of the depositors of the co-operative bank were entitled to receive the entire amount they had deposited from Deposit Insurance and Credit Guarantee Corporation (DICGC). 

It added that the bank, based in Karnataka’s Vijayanagar was not in a financial position to pay its current depositors in full.

Once the bank’s liquidation is complete, every depositor will be entitled to get deposit insurance claim amount for their deposits up to Rs 5 lakh. 

The DICGC has already paid Rs 13.07 crore of the total insured deposits as of August 06, 2022, it mentioned. 

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