RBI Cancels Purvanchal Cooperative Bank’s Licence

The Reserve Bank of India (RBI) has revoked the licence of Purvanchal Co-operative Bank, located in Ghazipur, Uttar Pradesh, citing inadequate capital and bleak earning prospects. Consequently, the Commissioner for Cooperation and Registrar of Cooperative Societies, Uttar Pradesh, has been instructed to initiate the bank’s winding-up process and appoint a liquidator. Upon liquidation, depositors will be eligible to receive up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per their deposit insurance coverage.

Financial Insufficiency and Regulatory Action

Purvanchal Co-operative Bank failed to demonstrate sufficient capital adequacy and sustainable profitability, prompting the RBI’s decision to cancel its banking licence. The bank’s financial position was deemed untenable to meet depositor obligations, necessitating regulatory intervention to safeguard public interest. DICGC has already disbursed Rs 12.63 crore to insured depositors, reflecting a partial coverage of liabilities and efforts to mitigate financial losses.

Impact and Depositor Rights

With the licence cancellation, Purvanchal Co-operative Bank is barred from conducting banking activities, including deposit acceptance and repayment. Most depositors, approximately 99.51%, are expected to recover their deposits up to the insured limit through DICGC, ensuring a measure of financial relief amid the bank’s closure.