RBI cancels the licence of The Mercantile Urban Co-operative Bank Ltd., Meerut, Uttar Pradesh
Case Brief
The Reserve Bank of India cancelled the licence of The Mercantile Urban Co-operative Bank Ltd., Meerut, Uttar Pradesh, by order dated March 30, 2017. The cancellation was issued under section 22 of the Banking Regulation Act, 1949 read with section 56, and it bars the bank from carrying on the business of banking under section 5(b), including acceptance and repayment of deposits, with immediate effect.
The Reserve Bank of India cancelled, by order dated March 30, 2017, the licence of The Mercantile Urban Co-operative Bank Ltd., Meerut, to carry on banking business under section 22 of the Banking Regulation Act, 1949 (as applicable to co-operative societies) read with section 56 of the Act. As a result, the bank is precluded from transacting the business of banking as defined in section 5(b), including acceptance and repayment of deposits, with immediate effect.
Severity Assessment
Licence cancellation is a severity-5 action under the rubric, and the order immediately prevents the bank from carrying on banking business.
The bank must stop banking operations immediately, including accepting fresh deposits and repaying deposits as part of normal banking business. Depositors and counterparties are affected because the institution is no longer permitted to operate as a bank.
Published as The Mercantile Urban Co-operative Bank Ltd., Meerut, Uttar Pradesh
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