After the liquidation, the Reserve Bank said that depositors from the Deposit Insurance and Credit Guarantee Corporation will be eligible to get a deposit of up to five lakh rupees.
The Reserve Bank of India (RBI) on Monday said that it has canceled the license of Vasantdada Nagari Sahakari Bank (Vasantdada Nagari Sahakari Bank, Osmanabad) located in Osmanabad, Maharashtra. RBI said that the bank will not be able to return the entire money of the present depositors according to its current financial situation. Due to this his license has been canceled. The central bank said that with the cancellation of the license and liquidation of the cooperative bank, the process of returning the money of depositors of Vasantdada Nagari Cooperative Bank will also be started.
After the liquidation, the Reserve Bank said that depositors from the Deposit Insurance and Credit Guarantee Corporation will be eligible to get a deposit of up to five lakh rupees. In this way, more than 99 percent of the cooperative bank’s depositors will get the full amount back. The license of the co-operative bank will be deemed canceled after the business ends on Monday. After this the cooperative bank will not be able to operate.
Subhadra Local Area Bank license was canceled on 23 December
Earlier, on 23 December, the Reserve Bank of India canceled the license of Subhadra Local Area Bank in Kolhapur. The central bank had then argued that the manner in which the bank was acting could harm the interests of existing and future depositors. Subhadra Lok Area Bank has enough cash to return depositors’ money.
The Arabi had said in its comment that the public interest would have been adversely affected if the manner in which the bank was operating had it been allowed to operate in the same manner. The nature of management’s functioning was detrimental to the interests of present and future depositors. The statement said that the license given to Subhadra Local Area Bank is being canceled since the closure of the bank business on December 24. This will prevent him from doing any banking activities. RBI will file before the High Court for liquidation of the bank.
Reserve Bank expressed concern over the high debt of the government
The Reserve Bank said that the increased government borrowing due to the epidemic has raised concerns about its continuity. The Reserve Bank said that it is likely to cause a shortage of resources for the private sector. RBI Governor Shaktikanta Das said that over-borrowing amidst a decrease in revenue has also put additional pressure on banks, which are facing problems such as an increase in non-performing assets (NPAs) due to the epidemic.
The Reserve Bank said in a half-yearly Financial Stability Report (FSR) that sovereign borrowings are increasing to adversely affect government revenue and thereby accelerate economic growth. It has now reached such a level that it has started to worry that the private sector does not get out of it, both in terms of quantity and cost of financing.
The Reserve Bank said in the report that after a hiatus, the balance sheet of banks will start to see pressure. It said corporate funding was supported through policy measures and exemptions from payment of installments due to the epidemic. The report stated that the pressure would begin to appear after an interval. This will have an adverse effect on the banking sector, as the problems of corporate and banking sector are interlinked.