Cancellation leads to questions over safety of deposits in cooperative banks.
MUMBAI (India CSR): The Reserve Bank of India (RBI) terminated the banking licences of two cooperative banks – Malkapur Urban Co-operative Bank in Maharashtra and Shushruti Souharda Sahakara Bank Niyamita in Karnataka, citing inadequate capital and earning prospects. The abrupt cessation of banking services by these institutions has triggered concerns over the safety of deposits in cooperative banks.
In such events, the Deposit Insurance and Credit Guarantee Corporation (DICGC) provides an insurance cover up to Rs 5 lakh. Nearly 98% and 92% depositors from the affected banks are entitled to receive their entire deposits from DICGC, showing a reassuring trend. Despite this, the incident has sparked renewed scrutiny over the stability of cooperative banks.
