The RBI has cancelled Purvanchal Co-Operative Bank's license due to insufficient capital and unsustainable financial prospects

Description

The Reserve Bank of India (RBI) canceled the license of Purvanchal Co-operative Bank in Ghazipur, Uttar Pradesh, citing insufficient capital and poor earnings prospects. As a result, the Commissioner for Cooperation and Registrar of Cooperative Societies in Uttar Pradesh has been directed to begin the bank's dissolution procedure and appoint a liquidator. Upon liquidation, depositors will be eligible to collect up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC) in accordance with their deposit insurance coverage.

Financial Insufficiency And Regulatory Action

Purvanchal Co-operative Bank failed to demonstrate enough capital adequacy and sustainable profitability, causing the RBI to revoke its banking license. The bank's financial situation was deemed unacceptable for meeting depositor obligations, forcing regulatory intervention to protect the public interest. DICGC has already paid out Rs 12.63 crore to insured depositors, indicating a partial covering of liabilities and steps to limit financial losses.

Impact And Depositors' Rights

Purvanchal Co-operative Bank is no longer able to conduct banking activities, including deposit acceptance and repayment, due to the revocation of its licence. Most depositors, about 99.51%, are likely to reclaim their deposits up to the insured amount through DICGC, providing some financial assistance during the bank's closure.

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