The Reserve Bank of India (RBI) has cancelled the license of Uravakonda Cooperative Town Bank Ltd, based in Andhra Pradesh, citing adequate capital and earning prospects. Consequently, the RBI has directed the bank to cease all banking operations with effect from the close of business on July 20, 2024.
The Commissioner for Cooperation and Registrar of Cooperative Societies, Andhra Pradesh, has been asked to issue an order to initiate the winding-up process of the bank and appoint a liquidator for its affairs.
According to RBI, Uravakonda Cooperative Town Bank lacks adequate capital and viable earning prospects, failing to meet the requirements stipulated in the Banking Regulation Act. The RBI emphasizes that allowing the bank to continue its operations would jeopardize the interests of its depositors. Given its current financial condition, the bank would be unable to fully repay its depositors. Therefore, the RBI has determined that the public interest would be adversely affected if the bank were allowed to persist in its banking activities.
With the cancellation of its license, Uravakonda Cooperative Town Bank is prohibited from conducting any business activities, including accepting new deposits or repaying existing ones. The RBI further clarifies that in the event of liquidation, depositors are entitled to claim compensation through the Deposit Insurance and Credit Guarantee Corporation (DICGC), up to a maximum of Rs5 lakh per depositor.
As per the information provided by Uravakonda Cooperative Town Bank, 99.95% of its depositors are eligible to receive the full insured amount from the DICGC for their deposits.
