In 2020, Reserve Bank of India (RBI) imposed crippling restrictions on HDFC Bank, India’s largest bank by market-capitalisation, sending shock waves throughout the banking industry.
After 2014, a total of 60 cooperative banks both urban and rural were closed due to failure while three banks were revived including the Punjab & Maharashtra Cooperative Bank, which was merged with Unity Small Finance Bank. In 2022, a total of 12 cooperative banks shut shop.
When it comes to bank loan defaults, the Reserve Bank of India’s (RBI’s) views seem to swing from one extreme to another, like a pendulum. It started in 2016 with RBI requiring strict classification of non-performing assets (NPAs) and fraud accounts.
Reasons for license cancellation varied from inadequate capital to failure to comply with legal regulations under the Banking Regulation Act and lack of earning prospects in the future. In fiscal 2023, the Reserve Bank of India (RBI) cancelled licenses of eight cooperative banks and imposed monetary penalties for 114 times