Reserve Bank of India Cancels License of Urban Co-operative Bank in Sitapur, Uttar Pradesh

In a recent development, the Reserve Bank of India (RBI) has taken the decision to revoke the license of the Urban Co-operative Bank based in Sitapur, Uttar Pradesh. The cancellation, effective from the close of business on Thursday, necessitates the immediate cessation of all banking operations and services by the said bank. To enforce this directive, the RBI has called upon the Commissioner and Registrar of Cooperatives, Uttar Pradesh, to issue a shutdown order for the bank and appoint a liquidator.

The RBI cited insufficient capital and dim prospects for earnings as the primary reasons behind the license cancellation. Additionally, the Urban Co-operative Bank was found to be in non-compliance with sections of the Banking Regulation Act of 1949. According to the RBI, the continuation of the bank's operations posed a threat to the interests of its depositors.

"The bank, given its current financial position, would be unable to pay its present depositors in full, and the public interest would be adversely affected if the bank is allowed to carry on its banking business any further," stated the RBI, as reported by ANI.

The central bank has imposed a prohibition on all banking activities by the said institution, including deposit transactions and customer repayments. Upon the bank's liquidation, depositors will be eligible to receive a deposit insurance claim amount, capped at ₹5,00,000, from the Deposit Insurance and Credit Guarantee Corporation.

It is worth noting that 98.92 percent of the depositors are expected to receive the full amount of their deposited funds.

This information is sourced from ANI.