RBI Terminates License of Urban Co-operative Bank, Uttar Pradesh

On Thursday 6th December the Reserve Bank of India (RBI) cancelled the licence of Urban Co-operative Bank Limited, Sitapur, Uttar Pradesh.

"Consequently, the bank ceases to carry on banking business, with effect from the close of business on December 07, 2023. The Commissioner and Registrar of Cooperative, Uttar Pradesh has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank," RBI said in a circular.

"Consequent to the cancellation of its licence, "Urban Co-operative Bank Limited, Sitapur, Uttar Pradesh" is prohibited from conducting the business of 'banking' which includes, among other things, 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," the circular stated.

RBI cancelled the license of Urban Co-operative Bank as it does not have adequate capital and earning prospects, and has failed to comply with the requirements of various sections of the Banking Regulation Act, 1949.

RBI said the continuance of the bank is prejudicial to the interests of its depositors and the bank with its present financial position would be unable to pay its present depositors in full. As a result, public interest would be adversely affected if the bank is allowed to carry on its banking business any further, according to the central bank.

According to the central bank, upon liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5 lakhs under the Deposit Insurance and Credit Guarantee Corporation (DICGC). RBI stated that as per the data submitted by the bank, 98.32% of the depositors are entitled to receive full amount of their deposits from DICGC.