“RBI Cancels Licences of Botad Peoples Co-operative Bank and Adarsh Mahila Nagari Sahakari Bank”

Current Context: On December 29, 2023, the Reserve Bank of India (RBI) cancelled the licences of two cooperative banks, one in Gujarat and one in Maharashtra.

• The Botad Peoples Co-operative Bank, located in Botad, Gujarat, had been in operation since 1998.
• The RBI cancelled its licence due to inadequate capital and earning prospects. The bank had a negative net worth of ₹16.6 crore as of September 30, 2023.
• It had also been classified as a "weak" bank by the RBI since March 2022.
• The Adarsh Mahila Nagari Sahakari Bank Maryadit, located in Aurangabad, Maharashtra, had been in operation since 1982.
• The RBI cancelled its licence due to the same reasons as the Botad Peoples Co-operative Bank.
• The bank had a negative net worth of ₹63.2 crore as of September 30, 2023. It had also been classified as a "weak" bank by the RBI since April 2022.

Question:

Q.1 What was the main reason for the RBI cancelling the licence of the Botad Peoples Co-operative Bank?
a. Fraudulent activities
b. Political interference
c. Inadequate capital and earning prospects
d. Merger with another bank