Bank License Cancel | Another bank has joined the list of banks that have suffered financial losses. RBI has revoked the license of People’s Cooperative Bank Limited in Uttar Pradesh. The bank said the financial situation was not good and there was no chance of earning income. The Bank therefore issued a notice of closure and directed the Registrar of Co-operative Societies to appoint a liquidator. The bank said it was not in the public interest to allow business transactions to take place as the financial situation was not good.
Depositors are worried about the bank’s license being revoked. However, as per the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act-1961, 99% of the customer’s deposits are paid after the completion of the liquidation process. DICGC pays up to Rs. 5 lakhs to each depositor. In line with this, it is known that Finance Minister Nirmala Sitharaman has made provisions for the DICGC Act in the 2021 Budget. In case of failure of the Bank to discharge its liabilities, DICGC will make timely payments of up to Rs. 5 lakhs to the depositors.
People’s Cooperative Bank is the fourth bank in the country to cancel its RBI license in the wake of the financial crisis. Earlier, the RBI had revoked the licenses of Surgerodada Naik Shirala Cooperative Bank, Independent Cooperative Bank, and Mantha Urban Cooperative Bank. All the three banks are based in Maharashtra. The RBI has revoked the licenses of the three banks due to poor financial condition and inability to generate revenue. DICGC will pay 99 per cent of the depositors’ deposits in these three banks, according to the RBI.