West Bengal-Based United Co-operative Bank’s License Cancelled by RBI
Moneylife Digital Team 14 May 2021
The Reserve Bank of India (RBI) has cancelled banking license of Bagnan, West Bengal-basdd United Co-operative Bank Ltd, due to poor financial condition. 
 
However, RBI says, all the depositors will receive full amount of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC).
 
"Consequently, the bank ceases to carry on banking business, with effect from the close of business on 13 May 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 for the bank," the RBI says in a release.
 
The banking regulator cancelled the license of the bank since the bank does not have adequate capital and earning prospects. "As such, it does not comply with the provisions of section 11(1) and section 22 (3) (d) read with section 56 of the Banking Regulation Act, 1949," the RBI said.
 
The continuance of the bank is prejudicial to the interests of its depositors in such a situation and the bank with its present financial position would be unable to pay its present depositors in full. Public interest would be adversely affected if the bank can carry on its banking business any further.
 
RBI said that because of the cancellation of its licence, the United Co-operative Bank, Bagnan, West Bengal is prohibited from conducting the business of 'banking', which includes acceptance of deposits and repayment of deposits as defined in Section 5 (b) read with Section 56 of the Banking Regulation Act, 1949 with immediate effect.
 
With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of United Co-operative Bank as per the DICGC Act, 1961 will be set in motion, the central bank added.
 
On liquidation, every depositor would be entitled to receive deposit insurance claim amount in respect of their deposits up to a monetary ceiling of Rs500000 from the DICGC subject to the provisions of the DICGC Act.
 
According to the data submitted by the bank, all the depositors will receive the full amount of their deposits from DICGC.
 
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