In a landmark ruling with far-reaching consequences for co-operative banks, the Allahabad High Court has upheld the Central Registrar’s decision denying multi-state status to The Mechanical Department Primary Co-operative Bank, a 100-year-old institution.
The division bench, comprising Justices Anjani Kumar Mishra and Jayant Banerji, noted that the bank failed to provide conclusive evidence that its objectives extended beyond a single state. Crucially, the court affirmed the Reserve Bank of India’s (RBI) regulatory primacy, emphasizing that banks must obtain prior approval before expanding operations across states.
Founded in 1919, the bank argued that its long-standing presence in Uttar Pradesh, Bihar, and Uttarakhand qualified it for multi-state registration under successive legislations. However, the Central Registrar had rejected its claim in 2018, citing lack of formal registration under central laws and non-compliance with RBI directives.
The High Court ruled that historical operations alone cannot confer multi-state status. Co-operative banks must comply with both the Multi-State Co-operative Societies Act and RBI regulations, including obtaining No Objection Certificates for cross-state expansion. The court also directed the bank to manage out-of-state deposits strictly under RBI guidelines, while leaving the door open for re-registration as a uni-state co-operative bank with regulatory approval.
