The Reserve Bank of India has revoked a bank’s licence for being too strict. The People’s Co-operative Bank, according to the RBI, does not have sufficient capital or a source of income. In such a situation, he violates the Banking Regulation Act’s provisions. Even some of the Regulation Act’s provisions have not been followed by the bank.
New Delhi: The Reserve Bank of India (RBI) has revoked the People’s Co-operative Bank of Uttar Pradesh’s licence. On March 17, the Reserve Bank of India (RBI) issued an order cancelling the licence of People’s Co-operative Bank Limited, Kanpur, Uttar Pradesh (People’s Co-operative Bank Limited, Kanpur). That is, as of March 21, 2022, the bank will no longer be doing banking business.
In addition, the RBI has directed the Cooperative Commissioner of Uttar Pradesh and the Registrar of Cooperative Societies to appoint a liquidator for the bank by issuing an order to close the bank.
In the order, what did RBI say?
‘The financial position of the co-operative bank is such that it cannot allow the depositors to make full payment, and if it is allowed to continue, the people’s interest will be harmed,’ RBI said in the order. The People’s Co-operative Bank was barred from engaging in “banking” activities, such as accepting and repaying deposits. The Reserve Bank has stated that upon liquidation, each depositor will be eligible for a deposit insurance claim amount of up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC). According to the bank’s data, more than 99 percent of depositors are entitled to receive the full amount of their deposits from DICGC.
What caused the licence to be revoked?
The Reserve Bank of India has given reasons for revoking People’s Co-operative Bank’s licence. The bank, according to the RBI, lacks sufficient capital and has no source of income, making it unable to comply with the Banking Regulation Act’s provisions. Not only that, but the bank has also broken some of the Regulation Act’s rules. According to the RBI, if the bank is allowed to continue, it will have an impact on its depositors. The RBI also stated that the bank’s position is such that it will be unable to refund the full amount to existing customers.
The Reserve Bank of India issued a press release.
According to a press release issued by the Reserve Bank, as of February 14, 2022, DICGC, on the basis of requests received from the bank’s associated depositors under Section 18A of the DICGC Act, 1961, out of total insured deposits of 6.97 crores, The amount of money that has been approved is Rs.
The licences of Sargerodada Nayak Shirala Sahakari Bank, Independence Co-operative Bank, and Mantha Urban Co-operative Bank were all revoked by the RBI earlier this year. Maharashtra is home to all three banks. All of these banks were forced to close because of their poor financial conditions, which could have exacerbated customers’ problems.