The Reserve Bank of India has cancelled the licence of United Co-operative Bank which is based in Bagnan, West Bengal. The RBI cancelled its licence as the UCB does not have adequate capital and earning prospects.
In a press release RBI said “Consequently, the bank ceases to carry on banking business, with effect from the close of business on May 13, 2021.”
The Registrar of Cooperative Societies, West Bengal has also been asked to issue an order for winding up the bank and appoint a liquidator for the bank.
In legal terms it means the UCB 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 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;
In a rather stern statement the RBI says “The continuance of the bank is prejudicial to the interests of its depositors”.
The release further reads “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.”
Consequent to the cancellation of its licence, United Co-operative Bank is prohibited from conducting the business of ‘banking’ which includes acceptance of deposits and repayment of deposits.
With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of the UCB will be set in motion.
As per the data submitted by the bank, all the depositors will receive the 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 their deposits up to a monetary ceiling of Rs five lakh from the DICGC.
