RBI has locked another bank, and money deposits and withdrawals stopped today; what will happen to the customer?
DICGC: DICGC is an institution created for the safety of depositors' money. It works under the Reserve Bank of India. If a bank fails, up to Rs 5 lakh is paid by DICGC.
Banaras Mercantile Bank Licence: The Reserve Bank of India (RBI) has taken strict action against another bank. This time RBI has locked Banaras Mercantile Co-operative Bank, Varanasi. The license of the co-operative bank has been canceled by the central bank given the deteriorating financial condition. While canceling the license, RBI made it clear that after this process, the bank will stop doing banking business after business hours on July 4, 2024. '
No deposit or withdrawal of money from July 5
After the action of RBI, no money will be deposited and withdrawn in Banaras Mercantile Bank from July 5. An appeal has also been made to the Cooperative Commissioner of Uttar Pradesh and the Registrar of Cooperative Societies to issue an order to close the bank and appoint a liquidator. RBI said that as per the data provided by the bank, 99.98 percent of the depositors are entitled to get back their entire money deposited in the bank from the Deposit Insurance and Loan Guarantee Corporation (DICGC).
The bank does not have sufficient capital and earning prospects.
Upon liquidation, every depositor will be entitled to receive a deposit insurance claim amount of up to Rs 5 lakh on his deposits from DICGC. RBI said that the cooperative bank does not have sufficient capital and earning prospects, now its continuation is not in the interest of the depositors. The Reserve Bank said, 'Due to its current financial position, the bank will not be able to make full payment to its depositors.'
Rs 4.25 crore already paid.
DICGC has already paid Rs 4.25 crore out of the total insured deposits to the concerned depositors of the bank based on their will till April 30 under the provision of the DICGC Act. Earlier, RBI had imposed restrictions on Banaras Mercantile Bank in December under Section 35 A of the Banking Regulation Act 1949. Under this, the bank was ordered not to give any loan and advance without the written prior permission of RBI.
What are the provisions under DICGC?
DICGC is a government body formed to protect the money of depositors. It works under the Reserve Bank of India (RBI). If a bank fails, then the deposit amount up to Rs 5 lakh is insured by DICGC and paid to the depositors. This amount applies to the deposit amount in every bank account, not to the deposit amount in all the banks of a person. Due to DICGC, the trust of depositors in the banking system increases. But let us tell you that not all banks are members of DICGC.
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