Mumbai, Sep 22 (IANS): The Reserve Bank of India (RBI) on Thursday cancelled the licence of The Laxmi Co-operative Bank Ltd in Maharashtra's Solapur.

Consequently, the bank ceases to carry on banking business, with effect from the close of business on September 22.

The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.

Following are the reason the central bank stated for cancelling the licence:

- The bank does not have adequate capital and earning prospects. As such, it does not comply with the provisions of Section 11(1) and Section 22 (3) (d) read with Section 56 of the Banking Regulation Act, 1949.

- The bank has failed to comply with the requirements of Sections 22(3) (a), 22 (3) (b), 22(3)(c), 22(3) (d) and 22(3)(e) read with Section 56 of the Banking Regulation Act, 1949;

- The continuance of the bank is prejudicial to the interests of its depositors;

- The bank with its present financial position would be unable to pay its present depositors in full; and

- Public interest would be adversely affected if the bank is allowed to carry on its banking business any further.

On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5 lakh only from the Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of DICGC Act, 1961.

As per the data submitted by the bank, about 99 per cent of the depositors are entitled to receive full amount of their deposits from the DICGC. As on September 13, the DICGC has already paid Rs 193.68 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961 based on the willingness received from the concerned depositors of the bank.