United Commercial Co-operative Bank Ltd., Kanpur (Uttar Pradesh)

The Reserve Bank of India cancelled the licence of United Commercial Co-operative Bank Ltd., Kanpur (Uttar Pradesh), effective from the close of business on January 24, 2015. RBI said the bank’s operations were being carried out in a manner detrimental to the interests of present and future depositors and the public, in violation of Sections 11 and 22(3) of the Banking Regulation Act, 1949 (AACS). The bank was not in a position to pay its present and future depositors in full as and when claims accrued, its financial position was so precarious that there was no scope for revival, and public interest would be adversely affected if it continued business. RBI also noted that the bank had not complied with minimum capital and reserves requirements under Section 11(1), its financial position had further deteriorated, statutory/supervisory concerns remained unaddressed, and there was no viable merger or revival proposal. RBI had earlier placed the bank under all-inclusive directions under Section 35A from May 31, 2013, with the last extension valid till February 28, 2015, before deciding to cancel the licence.

The bank can no longer conduct banking business, and liquidation/winding-up proceedings will begin. Depositors’ claims will move into the DICGC liquidation process, with repayment subject to the statutory ceiling of Rs 1,00,000 per depositor under usual terms and conditions. The order has immediate operational impact on the bank and its depositors.