RBI in action:
The Reserve Bank of India (RBI) has cancelled the licence of Purvanchal Co-operative Bank Ltd., Ghazipur, Uttar Pradesh, effective from the close of business on June 15, 2024. This decision, dated June 14, 2024, means the bank is no longer permitted to conduct banking operations.
Following the RBI’s order, the Commissioner for Cooperation and Registrar of Cooperative Societies, Uttar Pradesh, has been requested to issue an order for the bank’s winding up and to appoint a liquidator.
The RBI cited several reasons for the cancellation:
1. Inadequate Capital and Prospects: The bank lacks sufficient capital and earning potential
2. Regulatory Non-Compliance: The bank has not complied with Sections 22(3)(a) to 22(3)(e) of the Banking Regulation Act, 1949.
3. Depositor Interests: The bank’s continued operation is deemed prejudicial to the interests of its depositors.
4. Financial Instability: The bank is unable to pay its current depositors in full.
5. Public Interest: Allowing the bank to continue its operations would adversely affect public interest.
RBI added “Effective immediately, Purvanchal Co-operative Bank Ltd. is prohibited from accepting deposits, repaying deposits, or conducting any other banking business”
In the event of liquidation, depositors are entitled to claim up to ₹5,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC) under the DICGC Act, 1961. According to the bank’s data, approximately 99.51% of depositors will receive the full amount of their deposits from DICGC. As of May 30, 2024, DICGC has already disbursed ₹12.63 crore of the total insured deposits to the depositors based on their willingness.
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