The Reserve Bank of India (RBI) on Monday cancelled the license of Pune-based Seva Vikas Cooperative Bank, as the urban cooperative bank lacked sufficient capital and profitability prospects. The RBI stated that the bank ceased banking operations after closing business on October 10, 2022.

Earlier in August 2022, it cancelled the license of Pune-based Rupee Cooperative Bank. The RBI’s actions face legal challenges in the Bombay High Court.

About 99% of depositors are entitled to gross deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC), according to data submitted by the bank. As of September 14, 2022, DICGC has paid Rs 152.36 crore of the total insured deposits.

This payment is made according to the wishes of the relevant depositors of the bank under the provisions of the DICGC Act 1961.

The banking regulator said it had asked the Maharashtra Registrar of Cooperatives and Cooperatives to order the bank to wind up and appoint a liquidator for the bank.

The existence of banks is not in the interests of depositors. Banks in their current financial position will not be able to pay existing depositors in full. It added that the public interest would be adversely affected if the bank was allowed to conduct further banking operations.

In another regulatory action, the RBI was accused of non-compliance with the provisions of Section 56 of the Banking Supervision Act 1949 (the Act) and the RBI’s provisions on “Gold Loans – Bullet Repayments”.