RBI pulls plug on troubled Mumbai bank – Depositors assured timely payments
The Reserve Bank of India (RBI) has cancelled the license of The City Co-operative Bank based in Mumbai citing inadequate capital and loss of viability. In a major blow to the 96-year old institution, the banking regulator has directed an immediate shutdown and requested liquidation proceedings to start.
As per the RBI notification, the bank has failed on multiple statutory requirements for years and continued functioning posed significant risks. With zero chances of recovery, depositors' funds were at stake if the bank dragged on. However, the Deposit Insurance and Credit Guarantee Corporation (DICGC) has already released Rs. 230 crore to insure depositors up to Rs. 5 lakh each.
Being a co-operative bank, The City held limited public deposits of Rs 500 crore as of March 2024. Sources indicate 87% are fully insured by DICGC already. The liquidator upon appointment will finalize remaining claims expeditiously.
Depositors need not worry as regulation ensures timely settlement. This is another example of RBI's commitment to safeguard financial system stability through strict oversight and proactive resolution of troubled banks, regardless of ownership structure.
