BANK FAILURES

BANK FAILURES

TOPIC: Economy

Context- The Finance Ministry issued a gazette notification to Punjab Maharashtra Co-operative Bank Ltd (Amalgamation with Unity Small Finance Bank Limited) Scheme, 2022.

Concept-

• Bank failure is not something new in India.
• After the formation of the Reserve Bank of India in 1935, till the time of Independence (1947), there were 900 bank failures.
• From 1947 to 1969, as many as 665 banks failed. The depositors of all these banks lost their money.
• Even after 1969, 36 banks failed but these were rescued by merging them with other government banks. This included big lenders like Global Trust Bank.
• Recently, the failure of old generation Lakshmi Vilas Bank and new generation YES Bank. In all these cases, the government and the RBI ensured payment to depositors.