In a significant move, the Reserve Bank of India (RBI) has taken strict action against United India Co-operative Bank Limited, located in Nagina, Bijnor, Uttar Pradesh. The apex bank has cancelled the bank’s license and directed it to cease all banking operations, effective from the close of business on July 19, 2023.
In an official statement, the RBI clarified that United India Co-operative Bank is henceforth prohibited from conducting any banking activities, including accepting and repaying deposits, as defined in Section 5(b) read with Section 56 of the Banking Regulation Act, 1949.
The decision comes after the RBI’s evaluation of the bank’s financial health, which revealed inadequate capital and earning prospects. Consequently, the bank has failed to comply with the provisions of Section 11(1) and Section 22(3)(d) read with Section 56 of the Banking Regulation Act, 1949.
As a result of this serious breach, the RBI has called for immediate action to wind up the co-operative bank. The Commissioner and Registrar of Cooperative, Uttar Pradesh, have been directed to issue an order for the bank’s winding up and appoint a liquidator to oversee the process.
In response to the impending liquidation, the RBI assured depositors that they will be entitled to receive a deposit insurance claim amount for their deposits, subject to a monetary ceiling of ₹5,00,000 (Rupees five lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC). Based on the data submitted by the bank, an overwhelming 99.98% of depositors are expected to receive the full amount of their deposits from DICGC.
The RBI emphasized that allowing United India Co-operative Bank to continue its banking operations any further would be detrimental to public interest. Given the bank’s current financial position, it would be unable to fulfill its obligations to existing depositors in full.
The cancellation of United India Co-operative Bank’s license and the subsequent directive to cease operations reflect the RBI’s commitment to maintaining the stability and integrity of India’s banking system. By taking swift action against non-compliant financial institutions, the central bank aims to safeguard the interests of depositors and maintain confidence in the banking sector.
It is essential for customers and stakeholders of the bank to take appropriate measures to safeguard their financial interests during this transition period. As the bank begins the process of winding up, depositors are encouraged to approach the appointed liquidator for further information and assistance.
The RBI’s decision to cancel the license of United India Co-operative Bank serves as a reminder to all financial institutions to adhere strictly to the regulatory guidelines and maintain sufficient capital reserves to protect their customers’ interests. As the situation unfolds, the RBI will continue to monitor and oversee the winding-up process to ensure a smooth resolution for all stakeholders involved.
