RBI cancels Rupee Cooperative Bank's license

11 Aug 2022 , 08:41 AM

The license of Rupee Co-operative Bank Ltd in Pune has been revoked by the Reserve Bank of India (RBI) with effect six weeks from this day.

The commissioner for cooperation and registrar of cooperative societies in Maharashtra has also been asked to issue an order for the bank’s closure and appoint a liquidator, according to a news statement.

“Rupee Co-operative Bank Ltd, Pune” stands prohibited from conducting the business of “banking” with effect from September 22, 2022, including, among other things, accepting deposits and repaying deposits as defined in Section 5(b) read with Section 56 of the Banking Regulation Act, 1949,” according to the RBI press release.

The following explanations were provided by the central bank for the license cancellation:

• The bank lacks sufficient capital and earning potential. Therefore, it does not adhere to the rules of Sections 11(1) and 22(3)(d) read in conjunction with Section 56 of the Banking Regulation Act, 1949.
• The bank has not complied with Sections 22(3)(a), 22(3)(b), 22(3)(c), 22(3)(d), and 22(3)(e) of the Banking Regulation Act, 1949, read with Section 56;
• The interests of the bank’s depositors are harmed by the institution’s continued existence.
• With its current financial situation, the bank would be unable to fully reimburse its current depositors; and
• If the bank is permitted to continue operating as a bank, the public interest would suffer.

The bank is required by the RBI to give each eligible depositor the full value of their DICGC deposits. According to the statement, “every depositor would be eligible to collect deposit insurance claim amount of his/her savings from Deposit Insurance and Credit Guarantee
Corporation (DICGC) on liquidation up to a monetary ceiling of Rs5,00,000/- (Rupees five lakh only).”

According to Section 18A of the DICGC Act, 1961, DICGC has already paid out Rs700.44 crore of the total insured deposits as of May 18, 2022, depending on the expressed willingness of the affected bank depositors.