RBI cancels license of AP-based Uravakonda Co-op Town Bank

The Reserve Bank of India (RBI) has revoked the license of Andhra Pradesh-based Uravakonda Co-operative Town Bank.

According to the data provided by the bank, 99.95% of depositors are entitled to payment of the full amount of their deposit by DICGC.

In a press release in this regard, the RBI said: “Consequently, the Bank shall cease to operate its banking activities with effect from close of business on July 20, 2024.”

“The Commissioner of Cooperation and Registrar of Cooperative Societies, Andhra Pradesh, has also been requested to issue an order for winding up of the bank and appoint a liquidator for the bank,” RBI said.

The Reserve Bank has revoked the bank’s licence on the grounds that the bank does not have sufficient capital and profit prospects. As such, the bank does not comply with the provisions of Section 11(1) and Section 22(3)(d) read with Section 56 of the Banking Regulation Act, 1949.

In addition, the Bank has failed to comply with the requirements of Sections 22(3)(a), 22(3)(b), 22(3)(c), 22(3)(d) and 22(3)(e) read with Section 56 of the Banking Regulation Act 1949.

Furthermore, the continued existence of the bank would be detrimental to the interests of its depositors and, given its current financial position, the bank would not be able to repay its current depositors in full. Furthermore, the public interest would be compromised if the bank were allowed to continue its banking activities.

As a result of the cancellation of its licence, Uravakonda Co-operative Town Bank Ltd., Uravakonda (Anantapur District), Andhra Pradesh is prohibited with immediate effect from carrying on any ‘banking business’. This includes, inter alia, accepting deposits and refunding deposits as defined in Section 5(b) read with Section 56 of the Banking Regulation Act, 1949.

In case of liquidation, every depositor is entitled to deposit insurance to the value of his/her deposits up to a maximum of Rs 5,00,000/- (Rupees Five Lakhs only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to the provisions of the DICGC Act, 1961.