Reserve Bank of India (RBI) has cancelled the licence of United Co-operative Bank Ltd, based in Bagnan, West Bengal. Through an order dated May 10, 2021, the central bank has prohibited the co-operative lender from carrying on banking business, with effect from the close of business on May 13, 2021. The Registrar of Cooperative Societies, West Bengal has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.
RBI said it cancelled the licence as United Co-operative Bank did not have adequate capital and earning prospects. "As such, it does not comply with the provisions of section 11(1) and section 22(3)(d) read with section 56 of the Banking Regulation Act, 1949," the central bank further added.
"The bank has failed to comply with the requirements of section 22 (3) (a), 22 (3) (b), 22 (3) (c), 22 (3) (d) and 22 (3) (e) read with section 56 of the Banking Regulation Act, 1949," RBI noted in its order.
The bank with its present financial position would be unable to pay its present depositors in full, and its continuance is prejudicial to the interests of its depositors, the central bank said.
Public interest would be adversely affected if the bank is allowed to carry on its banking business any further, it further added.
"Consequent to the cancellation of its licence, United Co-operative Bank Ltd, Bagnan, West Bengal, is prohibited from conducting the business of 'banking' which includes acceptance of deposits and repayment of deposits as defined in Section 5 (b) read with Section 56 of the Banking Regulation Act, 1949 with immediate effect," RBI said.
With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of United Co-operative Bank as per the DICGC Act, 1961, will be set in motion, RBI said.
"As per the data submitted by the bank, all the depositors will receive full amount of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC). On liquidation, every depositor would be entitled to receive deposit insurance claim amount in respect of his/her deposits up to a monetary ceiling of Rs 5 lakh from the DICGC subject to the provisions of the DICGC Act, 1961," the central bank assured.