LI Network
Published on: December 08, 2023 at 16:10 IST
The Reserve Bank of India (RBI) announced the cancellation of the license of Urban Co-operative Bank Limited in Sitapur, Uttar Pradesh, citing insufficient capital and limited earning prospects. With this decision, the bank is no longer authorized to conduct banking operations, effective from the close of business on Thursday, December 7, 2023, as stated by the central bank.
Simultaneously, the RBI has requested the Commissioner and Registrar of Cooperative, Uttar Pradesh, to issue an order for winding up the bank and appoint a liquidator.
In the event of liquidation, depositors will be entitled to receive the deposit insurance claim amount for their deposits, subject to a monetary ceiling of Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
According to the RBI, based on the data submitted by the bank, 98.32% of depositors are eligible to receive the full amount of their deposits from DICGC. The cooperative bank is now prohibited from conducting banking activities, including accepting deposits and repaying deposits.
The decision to revoke the license stems from the bank’s inadequate capital and limited earning prospects, which would hinder its ability to fully repay its existing depositors.
The RBI’s move aims to safeguard the interests of depositors and ensure a systematic resolution in the face of the bank’s financial challenges.
