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RBI cancels license of United Cooperative Bank in West Bengal; here's how depositors will be affected

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The Reserve Bank of India (RBI) has canceled the license of the United Co-operative Bank Ltd, Bagnan in West Bengal.

RBI cancels license of United Cooperative Bank in West Bengal; here's how depositors will be affected

The Reserve Bank of India (RBI) has canceled the license of the United Co-operative Bank Ltd, Bagnan in West Bengal. The bank did not have adequate capital and lacked earning prospects, cited the apex bank regulator as reason behind the cancellation of the license.

“The banks 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 and the continuance of the bank would have been prejudicial to the interests of its depositors”, said RBI.

After the license cancelation banks will be prohibited from conducting the business of banking which means they will be not allowed to take deposits and repayment of deposits as defined in Section 5 (b) read with Section 56 of the Banking Regulation Act, 1949 with immediate effect.

Deposit Insurance and Credit Guarantee Corporation (DICGC) will overlook the process and will make sure that all the depositors will get their money back. However, on the liquidation, every depositor would be entitled to receive a deposit insurance claim amount up to a monetary ceiling of Rs 5,00,000.

The Registrar of Cooperative Societies, West Bengal has been requested to issue an order for liquidation of the bank. The RBI said in a statement, "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 requested to issue an order for winding up the bank and appoint a liquidator ."

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