The Reserve Bank of India revoked The City Co-operative Bank of Maharashtra's license on Wednesday due to insufficient capital and earnings potential.

According to RBI, an order for winding up the bank and appointing a liquidator has also been requested from the Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra.

As to the RBI, the cooperative bank will stop conducting banking activities on June 19, 2024, at the end of business hours.

How Do Depositor Insurance Claims Fare?

Following liquidation, each depositor would be eligible to collect from Deposit Insurance and Credit Guarantee Corporation (DICGC) the amount of their savings covered by their deposit insurance claim, up to a maximum of Rs 5 lakh.

"As per the data submitted by the bank, about 87 per cent of the depositors are entitled to receive full amount of their deposits from DICGC," the central bank stated.
DICGC has already paid out Rs 230.99 crore of the total insured deposits as of June 14, 2024, in accordance with the depositors' desire to participate.

Why Did the RBI Revoke the Bank's License?

The RBI provided specifics, stating that the cooperative bank located in Mumbai lacks sufficient capital and earning potential.

"The bank with its current financial position would be unable to pay its present depositors in full," it stated, adding that allowing it to continue operating as a bank would be detrimental to the public interest.

Following the license revocation, The City Co-operative Bank is not allowed to carry out any "banking" activities, which includes accepting and returning deposits, among other things.