In a notable development, the Reserve Bank of India (RBI) has made the decision to cancel the registration certificate of United India Cooperative Bank Ltd, which is located in Bijnor, Uttar Pradesh. The RBI cited the bank’s inadequate capital reserves and dimming earning prospects as primary reasons for this action. Additionally, the bank has failed to meet the regulatory requirements outlined in the Banking Regulation Act, 1949.
As a result of this license revocation, “United India Co-operative Bank Limited, Bijnor, Uttar Pradesh” is immediately restrained from engaging in any banking operations, including deposit acceptance and repayment. This decision was taken in accordance with Section 5(b) read with Section 56 of the Banking Regulation Act.
The RBI’s assessment indicates that the bank’s ongoing operations may pose a threat to the interests of its depositors, as its current financial position might hinder its ability to fully repay its depositors.
In the unfortunate event of liquidation, depositors may be eligible to claim a deposit insurance amount for their deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to a monetary limit of Rs 5 lakh, as per the central bank’s guidelines.
Data provided by United India Cooperative Bank reveals that an overwhelming majority of its depositors, approximately 99.98%, are entitled to receive the full amount of their deposits from DICGC, providing some reassurance to the affected customers.
Co-operative banks, like United India Cooperative Bank, are relatively smaller financial institutions where members play dual roles as owners and customers. These banks operate under the supervision of the RBI and are officially registered under the States Cooperative Societies Act.
Their primary objective is to serve the financial needs of a specific community, such as a village or a particular group of people. By pooling their resources, members establish these banks to offer essential banking services, such as loans and savings accounts, to support the financial requirements of their community.
It is essential for the affected bank’s depositors and stakeholders to closely monitor further developments following the RBI’s decision. The regulatory authority is committed to ensuring the stability and integrity of the financial sector, even amid challenges posed by struggling institutions.