Co-operative Banks do not have adequate capital and earning prospects, the Central Bank (RBI) claims. On Thursday, the Reserve Bank of India announced that the license of Deccan Urban Co-operative Bank in Karnataka had been cancelled as the lender does not hold ample capital and earning prospects. As per the recent study submitted by the bank, more than 99% of the depositors are permitted to receive the full amount of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC) in a release. The cooperative bank terminates to continue their banking business, effecting from the close of business on Thursday.

“The bank does not have adequate capital and earning prospects,” the RBI said while proclaiming the cancellation of the license. It also added that the Vijayapur-based bank, with its current-going financial position, would be incapable of paying its existing depositors in full.

The RBI has requested the Commissioner for Co-operation and Registrar of Co-operative Societies, Karnataka, to issue an order for winding up the bank, followed by appointing a liquidator.

On liquidation, every depositor is eligible to receive deposit insurance claim amount of their deposits up to five lakh from Deposit Insurance and Credit Guarantee Corporation (DICGC), besides paying Rs 13.07 crore of the total insured deposits as on 06th August 2022.

In another release of RBI, officials said that it has imposed a penalty of Rs 593,000 on Obopay Mobile Technology India Private Limited for non-compliance in assigning certain points of norms on Prepaid Payment Instruments (PPIs) and Know Your Customer (KYC).

The central bank added that the forfeit is based on deficiencies in supervisory compliance, not intending to articulate upon the validity of any transaction or agreement made by the firm with its customers.