RBI cancels licence of Seva Vikas Co-operative Bank; depositors to get maximum Rs 5 lakh

The Reserve Bank of India today cancelled the licence of Pune-based The Seva Vikas Co-operative Bank Ltd claiming that the bank does not have adequate capital and earning prospects. RBI said that the bank ceases to carry on banking business, with effect from the close of business on October 10, 2022. "The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank," said the RBI in a statement.

The RBI noted that the Seva Vikas Co-operative Bank with its present financial position would be unable to pay its present depositors in full. The central bank said that 99 per cent of the depositors are eligible to get the full amount of their deposits back. "On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5,00,000.....about 99% of the depositors are entitled to receive the full amount of their deposits from DICGC," said the central bank.

The reserve bank said that the Deposit Insurance and Credit Guarantee Corporation (DICGC) has already paid Rs 152.36 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961 as on September 14, 2022.

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"Consequent to the cancellation of its licence, 'The Seva Vikas Co-operative Bank Ltd., Pune, Maharashtra' is prohibited from conducting the business of ‘banking’ which includes, among other things, acceptance of deposits and repayment of deposits as defined in Section 5 (b) read with Section 56 of the Banking Regulation Act, 1949 with immediate effect," said the RBI.

The central bank also claimed that the bank has failed to comply with the provisions of Section 11(1) and Section 22 (3) (d) read with Section 56 of the Banking Regulation Act, 1949. "The bank has failed to comply with the requirements of Sections 22(3) (a), 22 (3) (b), 22(3)(c), 22(3) (d) and 22(3)(e) read with Section 56 of the Banking Regulation Act, 1949," it said.

The RBI said that public interest would be adversely affected if the bank is allowed to carry on its banking business any further.