In the previous financial year that concluded on March 31, the Reserve Bank of India (RBI) has made a significant decision to cancel the licenses of numerous co-operative banks.
This news is essential for those who have accounts in these banks. The RBI has taken strict measures, not only revoking bank licenses but also imposing substantial fines on certain banks. Unfortunately, co-operative banks have been severely impacted by the RBI’s actions.
RBI’s Stringent Actions: Penalties Imposed 114 Times
In the recently concluded financial year 2022-23, which ended on March 31, 2023, the Reserve Bank of India (RBI) has taken strict action against the functioning of co-operative banks. Notably, the licenses of eight co-operative banks have been cancelled due to non-compliance with banking regulations. The RBI has also imposed penalties on these banks more than 100 times for their failure to adhere to the prescribed rules.
Allegations of Negligence
Co-operative banks play a vital role in providing banking services in rural areas, but irregularities and negligence have come to light, leading to the RBI’s decisive steps. In addition to facing challenges like dual regulation and weak financial conditions, co-operative banks have also encountered interference from local leaders, further complicating their operations.
List of Banks Whose Licenses Cancelled
The following are the eight banks whose licenses have been cancelled by the RBI:
- Mudhol Co-operative Bank
- Milath Co-operative Bank
- Shri Anand Co-operative Bank
- Rupee Co-operative Bank
- Deccan Urban Co-operative Bank
- Lakshmi Co-operative Bank
- Sewa Vikas Co-Operative Bank
- Babaji Date Mahila Urban Bank
These banks faced license cancellations due to insufficient capital, non-compliance with banking regulations, and a lack of future earning potential. The RBI has been closely monitoring the co-operative banking sector for several years. In the past, the central bank cancelled licenses of 12 co-operative banks in the year 2021-22, 3 co-operative banks in 2020-21, and two co-operative banks in 2019-20.