The Reserve Bank of India on Friday said it has cancelled the banking licence of Lucknow Urban Co-operative Bank, as the lender does not have adequate capital and earning prospects.
The Commissioner and Registrar of Cooperative, Uttar Pradesh, has also been requested to issue an order for winding up the bank and appoint a liquidator for the cooperative bank, the Reserve Bank said.
On liquidation, every depositor would be entitled to receive a deposit insurance claim amount of his/her deposits up to a monetary ceiling of ₹5 lakh from Deposit Insurance and Credit Guarantee Corporation (DICGC).
As per the data submitted by the bank, 99.53 per cent of the depositors are entitled to receive the full amount of their deposits from DICGC, the RBI said.
Giving reasons behind the cancellation of the license, the central bank said Lucknow Urban Co-operative Bank does not have adequate capital and earning prospects.
“The bank with its present financial position would be unable to pay its present depositors in full,” it said, adding public interest would be adversely affected if the bank is allowed to carry on its banking business any further.
Consequent to the cancellation of its license, the bank has been prohibited from conducting the business of ‘banking’, which includes, among other things, acceptance of deposits and repayment of deposits with immediate effect.