RBI cancels license of UP bank, says 'can't pay its present depositors in full'
Depositors can get up to ₹5 lakh back, according to RBI rules.
New Delhi: The Reserve Bank of India (RBI) has cancelled the license of Sitapur-based Urban Co-operative Bank in Uttar Pradesh. With effect from Thursday's close of business, the bank will have to cease operations and banking services. RBI has asked the Commissioner and Registrar of Cooperatives, Uttar Pradesh, to issue an order for shutting down the bank and appointing a liquidator for the bank.
The Reserve Bank of India said the bank's license was cancelled due to lack of adequate capital and prospects of earning. It added that the Urban Co-operative Bank had also failed to comply with the sections of the Banking Regulation Act of 1949.
The Reserve Bank of India said the operation of the bank was detrimental to the interests of its depositors, reported ANI.
"The bank with its present 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," RBI said.
The RBI has prohibited the bank from any banking, including depositing money and repaying its customers.
After the liquidation of the bank, every depositor would be entitled to receive a deposit insurance claim amount of his/her deposits up to a monetary ceiling of ₹5,00,000 from the Deposit Insurance and Credit Guarantee Corporation, it said.
98.92 percent of the depositors will receive the full amount of their money.
With inputs from ANI
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