Fri. Mar 29th, 2024
RBISource: India Tv News

The Central Bank cancelled the license of the United Co-operative Bank Ltd, West Bengal, RBI said in an order dated May 10, 2021. After the Central Bank found that the bank doesn’t have adequate capital and earning prospects, It decided to cancel its Licence. 

RBI stated in its order, “The bank does 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 said in its official statement published on Thursday, May 13,“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”. It further added, “Public interest would be adversely affected if the bank is allowed to carry on its banking business any further.”

RBI in a detailed order explained that United Co-operative Bank 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. It further added, “Continuance of the bank is prejudicial to the interests of its depositors”. RBI showed the urgency in its order stating that The bank with its present financial position would be unable to pay its present depositors in full and public interest would be adversely affected if the bank is allowed to carry on its banking business any further.

According to the order, The bank will no longer be able to conduct normal business operations such as Deposits Acceptance and Remittance of  Deposits “with immediate effect”. “The continuance of the bank is prejudicial to the interests of its depositors,” RBI added. 

RBI’s in its strict order further said, “Consequent to the cancellation of its license, 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.”

But the Depositors don’t need to worry much, thanks to the Deposit Insurance and Credit Guarantee Corporation (DICGC) as they will receive the full amount of their deposits no matter what. However, depositors shall receive claim benefits of up to Rs 5 lakh.

By Harshita Sharma

I bring to you updates from business, policy and economy spectrum.