RBI revokes licence of Laxmi Co-operative Bank

The Reserve Bank of India (RBI) cancelled The Laxmi Co-operative Bank's licence on Thursday, citing a lack of appropriate capital. Upon liquidation, each depositor is entitled to a deposit insurance claim of up to Rs 5 lakh.

According to the RBI, if the bank is allowed to continue operations, it will be unable to pay its current depositors in full, and the public interest will suffer as a result.

"The Reserve Bank cancelled the bank's licence since the lender lacks enough capital and earning prospects, and the bank's continued existence is adverse to the interests of its depositors," the RBI said in a statement.

"Upon liquidation, each depositor would be entitled to receive deposit insurance claim amount of his/her savings up to a monetary limit of Rs 5 lakh from Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to the terms of the DICGC Act, 1961," the central bank stated.

The Maharashtra Commissioner for Cooperation and Registrar of Cooperative Societies has also been asked to issue an order to close the bank and appoint a liquidator.

According to bank data, almost 99 percent of depositors have the right to receive the full amount of their deposits from the DICGC. According to the RBI, as of September 13, the Laxmi Co-operative Bank had already paid Rs 193 crore of the total insured deposits depending on the desire of the bank's concerned depositors.