RBI Action: In May, RBI has shown strictness against many banks and companies. One bank’s license has been cancelled. Two companies have also been shut down. Let’s know why the central bank has taken this step?
Bank License Cancelled: The series of actions by the Reserve Bank of India continued in May as well. This month, many non-banking finance companies and banks have been hit. Some were fined, while some had their licenses cancelled. Within 31 days, RBI has cancelled the license of a bank and an NBFC. A notification has also been issued in this regard.
RBI has cancelled the license of Lucknow-based HCBL Co-operative Bank Limited. It has been said to be detrimental to the interests of customers. This action also affected the customers. At the same time, the certificate of registration i.e. license of M/s NY Leasing Private Limited, South Delhi and RL Investment and Finance Company Limited, Kanpur has been cancelled.
Bank closed down
RBI decided to cancel the license as the bank did not have sufficient capital and earning prospects. The continuation of this bank could have proved to be detrimental for the depositors. Its condition was so bad that it was not even able to repay the depositors. Now the bank can neither accept deposits nor will it be allowed to make repayments. However, under the DICGC Act 1961, every customer is entitled to receive deposit insurance claim amount of his deposits up to the monetary limit of Rs 5 lakh.
Company violated rules
M/s NY Leasing Pvt Ltd, South Delhi violated the rules prescribed by RBI on outsourcing of financial services in loan operations. Guidelines related to outsourcing of customers, their due diligence, loan disbursement, collection of repayments etc as well as KYC verification were not followed. After cancellation of COR, the companies are not allowed to continue business as non-banking financial institution.
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