The Reserve Bank of India (RBI) has taken a big action. The license of Imperial Urban Co-operative Bank has been cancelled.
New Delhi. The Reserve Bank of India (RBI) monitors the operations of all the banks in the country. Whenever a bank ignores the rules and acts arbitrarily, RBI can impose a fine on it. In this connection, RBI on Friday informed about cancelling the license of Jalandhar-based Imperial Urban Co-operative Bank. This step was taken because the bank did not have sufficient capital and earning prospects.
The Registrar of Co-operative Societies of the Punjab Government has also been requested to issue an order to close the bank and appoint a liquidator for the bank. On liquidation, every depositor will be able to get up to Rs 5 lakh of his deposit from the Deposit Insurance and Credit Guarantee Corporation Act (DICGC). RBI said that according to the bank’s data, 97.79 percent of the depositors will be able to get their entire deposit amount from DICGC. DICGC has already paid Rs 5.41 crore of total insured deposits till January 31, 2025.
Why action was taken against the bank
Regarding the reasons for cancelling the license of Imperial Urban Co-operative Bank, RBI said that the continuation of the bank is not in the interest of its depositors and if the bank is allowed to continue banking business further, it will adversely affect public interest. RBI said that due to its current financial position, the bank will be unable to pay its depositors.
Up to Rs 5 lakh is safe in case of bank failure.
In case of bank failure or bankruptcy, the only relief available to the depositor is the insurance cover provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC). Under DICGC, insurance cover is available up to Rs 5 lakh. No matter how much money is deposited in all your accounts in a single bank, you will get an insurance cover of only Rs 5 lakh. This amount includes both the principal and the interest amount. DICGC’s deposit insurance covers all insured commercial banks including LABs, PBs, SFBs, RRBs and co-operative banks.
