RBI cancels licence of Alwar Urban Co-operative Bank

The RBI today said the licence of Alwar Urban Co-operative Bank in Alwar, Rajasthan has been cancelled as it is not in a position to pay its depositors in full as and when their claims accrue, among other reasons.

The present financial position of the bank leaves no scope for its revival, the RBI said, adding that the cancellation of the licence is effective from the close of business on July 5.

"The Registrar of Co-operative Societies, Rajasthan has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank," the RBI said in a statement.

With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of Alwar Urban Co-operative Bank as per the DICGC Act will be set in motion.

"On liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of Rs 1,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per usual terms and conditions," the central bank said.

As the licence stands cancelled, the bank has been prohibited from conducting the business of banking, which includes acceptance of deposits and repayment of deposits with immediate effect, the RBI added.

The cancellation order was issued on July 3.

Giving reasons for cancellation of the licence, it said the bank does not have adequate capital and earning prospects, and hence does not comply with the relevant provisions of the Banking Regulation Act, 1949.

"The bank is not in a position to pay its present and future depositors in full as and when their claims accrue and thus, the bank does not comply...(with) the Banking Regulation Act, 1949," RBI said.

It further said the "affairs of the bank are being conducted in a manner detrimental" to the interest of its present and future depositors.

The RBI also noted that no useful purpose would be served by allowing the bank to continue.Rather, public interest would be adversely affected if the bank is allowed to carry on its banking business any further, it added.