The Reserve Bank of India (RBI) on Monday cancelled the licence of People's Co-operative Bank Limited, Kanpur over lack of adequate capital and earning prospects.
In a release, the RBI said that the cooperative bank's licence was cancelled as it does not have adequate capital and earning prospects and it failed to comply with various sections of the Banking Regulation Act.
The continuance of the bank is prejudicial to the interests of its depositors, and with its present financial position, it would be unable to pay its present depositors in full, the release said. Besides, public interest would be adversely affected if the bank is allowed to carry on its banking business any further, it added.
"Consequently, the bank ceases to carry on banking business, with effect from the close of business on March 21, 2022. The Commissioner for Cooperation and Registrar of Cooperative Societies, Uttar Pradesh has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank," the RBI said.
People's Co-operative Bank has been prohibited from conducting the business of 'banking', which includes acceptance of deposits and repayment of deposits, with immediate effect.
On liquidation, every depositor with the bank would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to the provisions of the DICGC Act, 1961.
"As per the data submitted by the bank, more than 99 per cent of the depositors are entitled to receive full amount of their deposits from DICGC. As on February 14, 2022, DICGC has sanctioned Rs 6.97 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961 based on the willingness received from the concerned depositors of the bank," the release said.
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