Urban Co-operative Bank Ltd., Sitapur

RBI cancelled the licence of Urban Co-operative Bank Limited, Sitapur, Uttar Pradesh. The bank must cease banking business immediately, and winding-up/liquidation steps are to follow.

The bank can no longer accept deposits, repay deposits as a bank, or conduct any other banking activity. Depositors will have to rely on liquidation and DICGC insurance, subject to the statutory ceiling of ₹5 lakh per depositor, while the cooperative authorities move to wind up the bank and appoint a liquidator. The action takes effect immediately for the business prohibition, with cessation of banking business from the close of business on December 7, 2023.

• Section 11(1)
• Section 22 (3) (d) read with Section 56 of the Banking Regulation Act, 1949
• 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

+1 more in the case brief

RBI placed Urban Co-operative Bank Limited, Sitapur under Section 35A restrictions. The bank faces limits on lending, investments, liabilities, fresh deposits, payments, and depositor withdrawals.

The bank must operate under RBI-imposed conditions until the directions expire or are modified. Borrowing, deposit mobilisation, lending, and most outflows are constrained, and depositors can withdraw only within the specified ceiling and conditions. Counterparties and borrowers may face delays or refusals for transactions requiring RBI approval.

• Section 35 A of the Banking Regulation Act, 1949
• Section 56 of the Banking Regulation Act, 1949

RBI imposed a ₹5 lakh penalty on Urban Co-operative Bank Ltd., Sitapur for continuous non-submission of required returns. The bank had responded to a show-cause notice, but RBI found the violation substantiated.

The bank must bear the monetary penalty, but the release does not describe any additional restriction on operations. The adverse impact is limited to the fine and the compliance record associated with the reporting lapse.

• Section 47A(1)(c)
• Section 46(4)
• Section 27 of the Act ibid