The Reserve Bank has cancelled the licence of Purvanchal Co-operative Bank, Ghazipur, Uttar Pradesh as it does not have adequate capital and earning prospects.

The Commissioner for Cooperation and Registrar of Cooperative Societies, Uttar Pradesh has also been asked to issue an order for winding up the bank and appoint a liquidator, the RBI said in a statement. On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to ₹5 lakh only from Deposit Insurance and Credit Guarantee Corporation (DICGC).

As per the data submitted by the Purvanchal Co-operative Bank, about 99.51 per cent of the depositors are entitled to receive full amount of their deposits from DICGC, the RBI said. Giving details, the RBI said the cooperative bank with its present financial position would be unable to pay its present depositors in full.

"The bank does not have adequate capital and earning prospects," it said, and added 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 licence, Purvanchal Co-operative Bank has been prohibited from conducting the business of ‘banking’ which includes, among other things, acceptance of deposits and repayment of deposits.

RBI also informed that DICGC (as on May 30, 2024) has already paid ₹12.63 crore of the total insured deposits based on the willingness received from the depositors concerned of the bank.

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