The Reserve Bank of India (RBI) has cancelled the banking licence of Imperial Urban Co-operative Bank Ltd., Jalandhar. As a result, the bank will cease to carry on banking operations from the close of business on April 25, 2025.
Following the licence cancellation, the RBI has also requested the Registrar of Cooperative Societies, Government of Punjab, to issue an order for the winding up of the bank and to appoint a liquidator.
Upon liquidation, depositors of the bank will be eligible to receive deposit insurance claims of up to Rs 5,00,000 under the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961. Based on the data provided by the bank, 97.79% of depositors are entitled to receive the full amount of their deposits through DICGC.
As of January 31, 2025, DICGC has already disbursed Rs 5.41 crore in insured deposits to eligible depositors under Section 18A of the DICGC Act, 1961, based on the consent submitted by the concerned depositors.
The RBI cited several reasons for cancelling the bank’s licence. Firstly, the bank does not have enough capital or earning prospects. It also fails to comply with key provisions of the Banking Regulation Act, 1949, including Sections 11(1) and 22(3)(d) read with Section 56.
Secondly, the bank has not met the requirements listed under Sections 22(3)(a) to 22(3)(e) of the same Act. In addition, the RBI noted that the continued operation of the bank is harmful to the interests of its depositors.
The bank is also not in a financial position to repay its depositors in full. Finally, the RBI stated that public interest would be affected if the bank were allowed to continue its banking operations.
With immediate effect, the bank is prohibited from conducting any banking activities, including the acceptance and repayment of deposits, as defined under Section 5(b) read with Section 56 of the Banking Regulation Act, 1949.
Only last week the Reserve Bank of India (RBI) had cancelled the banking licence of Ajantha Urban Co-operative Bank Maryadit, Aurangabad. The bank was prohibited from carrying out any banking operations, effective from the close of business on April 22, 2025.
Encouragingly, 91.55% of the bank’s depositors are expected to recover their full deposit amounts under the DICGC framework in the case of Ajantha Urban Co-operative Bank.