RBI cancels licence of this bank, here's what happens to depositors' money

The Reserve Bank of India (RBI) has cancelled the license of Goa's Madgam Urban Co-operative Bank Ltd. The decision was taken due to the poor financial condition of the bank. 

With the cancellation of the license, there has also been a ban on taking deposits and making payments.

RBI says that this move will not affect the customers of the bank, adding that as per the data given by the bank, about 99 percent of the depositors will get their entire deposits back under the Deposit Insurance and Credit Guarantee Corporation (DICGC).

The central bank informed that the Registrar of Cooperative Societies of Goa has also demanded the closure of the bank. Along with this, a request has been made to issue an order to appoint a liquidator for the bank.

"Mudgam Urban Co-operative Bank does not have sufficient capital and earning prospects to run it. Also, this bank has failed to comply with various provisions of the Banking Regulation Act, 1949," RBI said.

It added, "The bank with its current financial position is unable to make full payments to its existing depositors. And if the bank was not closed, it would have had a direct impact on its customers. Therefore, it was decided to cancel the license of the bank."