RBI cancels license of Deccan Urban Co-operative Bank

The Reserve Bank of India (RBI) on Thursday cancelled the license of Deccan Urban Co-operative Bank Ltd, Vijayapur, Karnataka due to inadequate capital and no earning prospects. Consequently, the bank ceases to carry on banking business, with effect from the close of business on August 18, 2022.

“Consequent to the cancellation of its license, “Ltd., Vijayapur, Karnataka” is prohibited from conducting the business of ‘banking’ which includes, among other things, 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,” RBI said.

Reasons of cancellation of license of Deccan Urban Bank are:

• The bank does not have adequate capital and earning prospects;
• The continuance of the bank is prejudicial to the interests of its depositors;
• 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 is allowed to carry on its banking business any further; and
• 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.

Bank wouldn’t be able to fully reimburse its current depositors

The cooperative bank stops conducting banking operations as of Thursday’s conclusion of business. Additionally, it stated that givex`n its current financial situation, the Vijayapur-based bank wouldn’t be able to fully reimburse its existing depositors.

The state’s Commissioner for Cooperation and Registrar of Cooperative Societies has also been instructed to issue an order winding up the bank and appoint a liquidator for the bank.

Every depositor would be entitled to receive a deposit insurance claim amount

RBI said, “the continuance of the bank is prejudicial to the interests of its depositors.” According to the central bank, upon liquidation, every depositor would be entitled to receive a deposit insurance claim amount of his or her deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC), pursuant to the DICGC Act, 1961, up to a monetary ceiling of Rs 5 lakh.

According to data provided by the bank, more than 99% of depositors are eligible to receive their total deposits back from DICGC. RBI had also announced the cancellation of the license of the Pune-based Rupee Cooperative Bank a week ago.

Press release issued by RBI can be downloaded from here:

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