RBI Imposes Penalties, Revokes License Of Urban Cooperative Bank In Uttar Pradesh

The Reserve Bank of India (RBI) has taken punitive actions against several banks and revoked the license of the Urban Cooperative Bank Limited, situated in Sitapur, Uttar Pradesh, for failing to comply with regulatory guidelines. The RBI's decision to shut down the cooperative bank was prompted by its insufficient operational funds and a lack of foreseeable earnings. Consequently, the Urban Cooperative Bank ceased its operations on 7 December 2023.

The RBI has directed the Commissioner and Registrar of Uttar Pradesh to oversee the bank's closure, citing non-payment issues with its customers. However, the RBI assures that a vast majority of the bank's clients will receive nearly their entire deposited amounts. Notably, 98.32 per cent of the bank's customers, who hold deposits of Rs 5 lakh or less, will have their funds fully insured and refunded.

In addition to revoking the license of Urban Cooperative Bank, the RBI has imposed fines on four other cooperative banks: Patan Cooperative Bank, District Central Bank, Rajarshi Shahu Cooperative Bank and Primary Teachers’ Cooperative Bank. The penalties, ranging from Rs 10,000 to Rs 1 lakh, were levied due to various malpractices observed in these banks.

The District Central Bank faced penalties for non-compliance with National Bank for Agriculture and Rural Development (NABARD) guidelines, while Patan Cooperative Bank violated KYC norms. Similarly, the Primary Teachers’ Cooperative Bank breached RBI regulations by offering gold loans. The Rajarshi Shahu Cooperative Bank was penalised for failing to meet minimum balance requirements.