The Reserve Bank of India (RBI) on Wednesday said it has cancelled the licence of Uttar Pradesh-based United India Co-operative Bank Limited, citing lack of adequate capital and earning prospects.
Consequently, the bank ceases to carry on business, with effect from the closing hours on Wednesday, the RBI said in a statement.
On liquidation, it said every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a ceiling of Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
"As per the data submitted by the bank, 99.98 per cent of the depositors are entitled to receive full amount of their deposits from DICGC," it said.
Giving reasons for cancellation of the licence, it said United India Co-operative Bank, based out of Bijnor in Uttar Pradesh, does not have adequate capital and earning prospects.
"The bank with its present financial position would be unable to pay its present depositors in full," the RBI said, adding that the continuance of the bank is prejudicial to the interests of its depositors.
With the licence cancelled, the bank has been prohibited from conducting regular business, which includes acceptance and repayment of deposits.
The Commissioner and Registrar of Cooperative, Uttar Pradesh, has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.