Reserve Bank of India has canceled the license of Cooperative Bank Sitapur of UP. According to the order, the depositor will get up to Rs 5 lakh. Know the updates.
RBI cancels Cooperative bank license: Reserve Bank of India has canceled the license of Uttar Pradesh Cooperative Bank Sitapur. Also, orders have been issued to close the functioning of the bank from today. According to the order, depositors will get up to Rs 5 lakh. Reserve Bank of India has taken this decision in view of the poor financial condition of the bank through DICGC cover. Issuing the order to cancel the license, it has been said that the bank does not have sufficient capital. Also, the Commissioner and Registrar of Cooperatives of UP has been asked to appoint a liquidator for the bank.
RBI said the bank does not have enough capital
The Reserve Bank of India, while giving the reason for canceling the license of the bank, has said that the bank does not have sufficient capital and income prospects. Thus, it does not follow the provisions of Section 11(1) and Section 22(3)(d) read with Section 56 of the Banking Regulation Act, 1949. The survival of the bank is against the interests of its depositors. The Bank with its current financial position will be unable to make full payments to its existing depositors.
Bank banned from banking business
According to RBI, if the bank is allowed to continue its banking business, it will have a negative impact on public interest. In its statement, RBI has further said that after the cancellation of the license, it is prohibited to carry on ‘banking’ business, which inter alia includes acceptance of deposits and repayment of deposits. The Bank is governed by Sections 22(3)(A), 22(3)(B), 22(3)(C), 22(3)(D) and 22(3) read with Section 56 of the Banking Regulation Act, 1949. (E) could not meet the needs.
After liquidation, every depositor shall, under the provisions of the DICGC Act, 1961, make a deposit insurance claim in respect of his deposits up to a monetary limit of ₹ 5,00,000/- (Rupees Five Lakhs only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC). Will be entitled to receive the amount. As per the data presented by the bank, 98.32% depositors are entitled to receive their entire deposits from DICGC.
