One more wicket down! The days are not going well for the cooperative banking sector as the Reserve Bank of India cancelled the license of one more UCBs namely Mahabhairab Cooperative Urban Bank, Tezpur, Assam on Wednesday.
The Reserve Bank of India (RBI), vide order dated July 23, 2024, has cancelled the licence of “The Mahabhairab Cooperative Urban Bank Ltd., Tezpur, Assam”.
As on June 13, 2024, DICGC has already paid Rs 20.03 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961 based on the willingness received from the concerned depositors of the bank.
Issuing a press release, RBI said, “Consequently, the bank ceases to carry on banking business, with effect from the close of business on July 24, 2024. The Registrar of Cooperative Societies, Assam has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank”.the apex bank said.
The Reserve Bank cancelled the licence of the bank as 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.
Besides, the bank has failed to comply with the requirements of Sections 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.
RBI said, The continuance of the bank is prejudicial to the interests of its depositors and the bank with its present financial position would be unable to pay its present depositors in full; and Public interest would be adversely affected if the bank is allowed to carry on its banking business any further, the apex bank said.
On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5,00,000 from Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of DICGC Act, 1961.
Since January 2024 -July 2024, RBI cancelled the license of nine urban cooperative banks, which does not indicate a good signal for the cooperative banking sector.