RBI Cancels Bank License: Know the New Rules for Deposit Refunds and Withdrawals
In a move aimed at safeguarding depositors’ interests, the Reserve Bank of India (RBI) has cancelled the license of a cooperative bank due to regulatory non-compliance and financial instability. If you’re a customer or depositor, here’s what you need to know about the new rules governing refund of deposits and withdrawal procedures.
Why the License Was Cancelled
The RBI cited persistent issues such as:
- Inadequate capital reserves
- Failure to comply with banking norms
- Declining financial health
- Inability to pay current depositors in full
These issues made the bank unfit to carry on banking operations, prompting immediate action to protect public interest.
What Happens to Your Money?
With the license revoked, the bank ceases all operations immediately, including accepting deposits or renewing fixed deposits. But there’s no need to panic—depositors are protected under the Deposit Insurance and Credit Guarantee Corporation (DICGC).
New Rules for Deposit Refunds
According to the updated DICGC rules:
- Each depositor is insured up to ₹5 lakh, including principal and interest.
- DICGC will process refunds within 90 days of RBI’s notification.
- The refund is automatic—no need to apply manually unless specifically instructed.
- If your total deposit exceeds ₹5 lakh, you’ll be eligible to receive only the insured portion initially.
Withdrawal Guidelines After License Cancellation
Once the license is canceled:
- All withdrawals are frozen until DICGC processes the insured payout.
- No ATM or cheque transactions will be honored.
- After refunds are processed, any remaining unclaimed balance may be returned if the bank recovers dues through liquidation.
What You Should Do Now
✔️ Keep your bank documents and deposit receipts handy
✔️ Monitor RBI and DICGC official websites for updates
✔️ Contact the bank’s customer service for specific instructions
✔️ Don’t fall for fraudsters offering “help” in getting your money back
Final Word
While RBI’s move may sound alarming, it’s a protective step to prevent bigger losses. Thanks to modern safeguards like DICGC, your deposits up to ₹5 lakh are insured, and refunds are now faster and more transparent than ever.
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