The Reserve Bank of India has cancelled the license of Bagnan, United Co-operative Bank Ltd, West Bengal.
The decision was made after the central bank determined that the bank lacked adequate capital and earning opportunities, according to an order issued by the RBI on May 10, 2021.
“Consequently, the bank ceases to carry on banking business, with effect from the close of business on May 13, 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 said in a statement.
United Co-operative Bank Ltd Would Be Unable To Pay The Depositors!
Depositors don’t need to worry much, as they will receive the full amount of their deposits, thanks to the Deposit Insurance and Credit Guarantee Corporation (DICGC).
However, depositors will receive claim benefits of up to Rs 5 lakh.
RBI also said that in the current situation, the bank would not be able to pay its depositors the full amount of their deposits. The process of liquidation will now being.
“The continuance of the bank is prejudicial to the interests of its depositors,” RBI said.
Why RBI Cancelled The Licence Of The Bank?
There is the various reason of the cancellation of license of Bagnan, United Co-operative Bank Ltd, West Bengal.
Also, one of the major reason is the bank lacks sufficient resources and earnings potential. As a result, it violates section 11(1) and section 22 (3) (d) of the Banking Regulation Act, 1949, as well as section 56 of the Act.
The bank with its present financial position would be unable to pay its present depositors in full amount.
No Conducting Business Of ‘Banking’
The bank is also prohibited from conducting the business of ‘banking’ which includes acceptance of deposits and repayment of deposits.
The Registrar of Cooperative Societies, West Bengal has requested to issue an order for winding up the bank and also appoint a liquidator for the bank.
RBI also said in its official statement published on Thursday, May 13.
“Public interest would be adversely affected if the bank is allowed to carry on its banking business any further” RBI added.