The Reserve Bank of India (RBI) has taken strict action against two banks, highlighting its commitment to maintaining financial stability.
Uravakonda Co-operative Town Bank License Cancelled
The RBI has cancelled the license of the Uravakonda Co-operative Town Bank Limited located in Uravakonda, Andhra Pradesh. This means the bank is no longer permitted to conduct banking business, including accepting or returning deposits.
The decision was made due to the bank’s inadequate capital and earning prospects, leading to non-compliance with provisions of the Banking Regulation Act. The RBI concluded that allowing the bank to continue would be detrimental to depositors’ interests.
Depositors’ Rights
Depositors of the Uravakonda Co-operative Town Bank Limited are advised that they can claim the deposit insurance amount of Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation.
Yashwant Co-operative Bank Fined Rs 5 Lakh
The Yashwant Co-operative Bank Limited, located in Satara district of Maharashtra, has been fined Rs 5 lakh for violating various rules.
During a statutory inspection on March 31, 2023, the RBI found that the bank had failed to:
- Classify certain loan accounts as non-performing assets according to income recognition, asset classification, and provisioning boards.
- Review the maturity classification of its customers as per the prescribed maturity period.
- Transfer unclaimed balances for more than 10 years to the Depositor Education and Awareness Fund.
- Inform customers about flat penalty charges levied for non-maintenance of minimum balance in budget accounts.
RBI’s Commitment to Financial Stability
The RBI’s actions against these two banks demonstrate its commitment to ensuring the stability and integrity of the Indian banking system. These measures are crucial for protecting depositors’ interests and maintaining public confidence in the financial sector.