RBI Cancels Licence of Shimsha Sahakara Bank Amid Worsening Financial Health

The RBI has revoked the licence of Shimsha Sahakara Bank Niyamitha, citing its deteriorating financial condition. The bank must cease operations from July 05, 2024. Deposit insurance will cover up to Rs 5 lakh per depositor. Already, Rs 11.85 crore has been disbursed to eligible depositors.

The Reserve Bank of India (RBI) has revoked the licence of Shimsha Sahakara Bank Niyamitha, located in Maddur, Karnataka, due to its worsening financial health.

Effective from the close of business on July 05, 2024, the bank is no longer allowed to conduct banking operations, according to a statement by the RBI. The Registrar of Cooperative Societies in Karnataka has also been urged to issue an order for the bank's liquidation and to appoint a liquidator.

Depositors are set to receive up to Rs 5 lakh in deposit insurance from the Deposit Insurance and Credit Guarantee Corporation (DICGC). According to data from the bank, 99.96 per cent of depositors will get the full insured amount. RBI further revealed that the bank lacks sufficient capital and earnings prospects, making it unable to meet its depositors' needs. As of March 31, 2024, Rs 11.85 crore has already been paid out by the DICGC based on depositors' willingness.

(Disclaimer: With inputs from agencies.)