Page 22 - Banking Finance May 2021

CO-OPERATIVE BANK NEWS

Co-Operative Bank

News

RBI cancels licence of RBI, in a recent release, stated, "The any loans and advances, make any
bank does not have adequate capital investment, incur any liability including
Bhagyodaya Friends Urban and earning prospects. As such, it does the borrowing of funds, etc., only

Co-operative Bank not comply with the provisions of after approval from RBI. "Reserve
Reserve Bank of India has recently section 11(1) and section 22 (3) (d) Bank of India has now, in public
cancelled the banking licence of read with section 56 of the Banking interest, further extended the
Maharashtra-based Bhagyodaya Regulation Act, 1949. The bank has directions for a period of two months
Friends Urban Co-operative Bank Ltd. failed to comply with the requirements from April 19, 2021 to June 18, 2021,"
for failing to garner adequate capital of section 22(3) (a), 22 (3) (b), 22(3)(c), RBI said.
and with no prospects of earning for 22(3) (d) and 22(3)(e) read with section Under sub-section (1) of section 35 A
the lender. Almost 98% of the 56 of the Banking Regulation Act, read with section 56 of the Banking
depositors and customers of 1949." Regulation Act, 1949 (AACS) from the
Bhagyodaya Friends Urban Co- With the cancellation of licence, close of business on July 18, 2018, the
operative Bank are eligible to receive liquidation proceedings will commence restrictions were imposed by RBI. This
full amount from the Deposit Insurance and the process of paying depositors of direction was modified from time to
and Credit Guarantee Corporation Bhagyodaya Friends Urban Co- time which was last extended up to
(DICGC). operative Bank would be set in motion. April 18, 2021. RBI stated that the
As per the statement of RBI, more details of this direction is displayed at
than 98% of the depositors will receive WB-based United the bank's premises.
full amounts of their deposits from The bank will continue to undertake
DICGC. On liquidation, every depositor Cooperative Bank will banking business with restrictions till
would be entitled to receive deposit continue to be under its financial position improves. RBI may
insurance claim amount of his/her consider modifications of these
deposits up to a monetary ceiling of radar of RBI directions depending upon
Rs. 5 lakh from the DICGC subject to RBI has recently issued a direction circumstances from time to time.
the provisions of the DICGC Act, 1961. suggesting that West Bengal-based
United Co-operative Bank Limited will
The bank was under 'all-inclusive Citizens' Cooperative Bank
continue to be under its close watch.
directions' since January 17, 2019. RBI
From July 18, 2018, the cooperative reports profit for 2020-21
has also directed the state
bank had been directed to follow RBI's
commissioner for cooperation and After three consecutive years of
registrar of cooperative societies to direction in the case of operations. straight loss, Citizens' Cooperative
issue an order for winding up and In 2018, RBI has directed the Bank (CCBL) Jammu has registered
appointing a liquidator for the bank. cooperative bank to grant or renew profit in 2020-21 on the back of

22 | 2021 | MAY | BANKING FINANCE