The bank does not have adequate capital and earning prospects
FinTech BizNews Service
Mumbai, January 1, 2024: The Reserve Bank of India (RBI), vide order dated
December 29, 2023, has cancelled the licence of “The Faiz Mercantile Cooperative
Bank Ltd., Nashik, Maharashtra.” Consequently, the bank ceases to carry on banking
business, with effect from the close of business on December 30, 2023. 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.
The Reserve Bank cancelled the license of the bank as:
The bank does not have adequate capital and earning prospects. As such, it does
not 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;
The continuance of the bank is prejudicial to the interests of its depositors;
The bank with its present financial position would be unable to pay its present
depositors in full; and
Public interest would be adversely affected if the bank is allowed to carry on its
banking business any further.
2. Consequent to the cancellation of its licence, “The Faiz Mercantile Cooperative
Bank Ltd., Nashik, 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.
3. On liquidation, every depositor would be entitled to receive deposit insurance
claim amount of his/her deposits up to a monetary ceiling of ?5,00,000/- (Rupees five
lakh only) from Deposit Insurance and Credit Guarantee Corporation (DICGC)
subject to the provisions of DICGC Act, 1961. As per the data submitted by the bank,
99.87% of the depositors are entitled to receive full amount of their deposits from
DICGC. As on October 30, 2023, DICGC has already paid ?7.07 crore of the total
insured deposits under the provisions of Section 18A of the DICGC Act, 1961 based
on the willingness received from the concerned depositors of the bank.
