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The Mirzapur Urban Co-operative Bank Ltd., Mirzapur (Uttar Pradesh)

Co-operative bankMirzapur, Uttar Pradesh

The RBI action, regulatory basis, and operating impact linked to this entity.

Recorded RBI impact

License cancellation

License cancellation · Fresh imposition

S5

Published by RBI

25 Sept 2014

Case Brief

RBI cancelled the banking licence of The Mirzapur Urban Co-operative Bank Ltd., Mirzapur (Uttar Pradesh), with effect from the close of business on September 11, 2014. The regulator said the bank had ceased to be solvent, revival prospects were bleak, all efforts to revive it had failed, and there was no viable merger proposal. The release cites serious deficiencies from statutory inspections, including erosion of capital and reserves, negative CRAR, large NPAs, accumulated losses, and violations of regulatory norms such as limits on single-borrower exposures, unsecured advances, IRAC norms and KYC norms. RBI also stated the bank had not complied with several provisions of the Banking Regulation Act and had been conducting its affairs in a manner detrimental to depositors’ interests. Following cancellation, the bank is prohibited from carrying on banking business and liquidation proceedings are to begin, with DICGC-insured deposit repayment to be set in motion subject to applicable terms and conditions.

Why RBI Acted

Licensing breachCapital & exposure normsReporting & disclosureKYC / AML

RBI cancelled the licence of The Mirzapur Urban Co-operative Bank Ltd., Mirzapur (Uttar Pradesh), effective from the close of business on September 11, 2014. The release says the bank had ceased to be solvent, efforts to revive it had failed, no viable merger proposal was available, and continued uncertainty was inconveniencing depositors. RBI also notes serious statutory and prudential deficiencies, including non-compliance with Sections 11(1), 18, 22(3)(a), 22(3)(b) and 31 of the Banking Regulation Act, persistent capital erosion, high NPAs, accumulated losses, weak CRAR, violations of borrower exposure ceilings, unsecured lending limits, and KYC/IRAC norms.

Operating Impact

The bank can no longer carry on banking business and is to be taken into liquidation. Depositors will be able to claim insured amounts up to the DICGC ceiling, subject to the deposit insurance scheme’s terms and conditions, while other creditors and stakeholders are affected by the winding-up process. The effective date is the close of business on September 11, 2014.

Regulatory Basis

  • Section 35A of BR Act
  • Section 22 of the Act
  • Section 5(b) of the Act
  • Sections 11(1), 18, 22(3)(a), 22(3)(b) and 31 of the Act

Action Facts

Primary Impact
License cancellation
Order Date
11 Sept 2014
Effective From
11 Sept 2014
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank