In another major move, the Reserve Bank of India (RBI) has cancelled the license of a cooperative bank, leaving its customers in a worrying situation. The action was taken due to concerns over the bank’s financial health and its ability to safeguard depositors' interests. Here’s a detailed look at what happened and what it means for the bank’s customers.
The Reserve Bank of India announced on Friday that it has cancelled the banking license of Imperial Urban Co-operative Bank, based in Jalandhar, Punjab. According to the central bank, the decision was made because the bank lacked sufficient capital and had no earning prospects for the future.
The RBI further stated that continuing the bank’s operations would have been harmful to depositors’ interests. As a result, the RBI requested the Registrar of Cooperative Societies, Punjab, to issue an order for the bank’s closure and to appoint a liquidator to oversee the winding-up process.
The RBI cited several reasons for this decisive step:
The bank's financial position was weak and it was unable to maintain adequate capital.
It was unlikely to pay its depositors in full.
Allowing the bank to continue would adversely affect public confidence and interest.
Immediate action was needed to prevent further risks to the banking system.
Following the license cancellation, Imperial Urban Co-operative Bank is now prohibited from carrying out any banking activities, including accepting or repaying deposits.
Understandably, customers are concerned about the safety of their deposits. However, there is good news for most depositors.
As per the RBI, each depositor is eligible to claim up to ₹5 lakh through the Deposit Insurance and Credit Guarantee Corporation (DICGC). This insurance covers the principal and interest amount held in savings accounts, fixed deposits, current accounts, and recurring deposits.
Here’s what the data shows:
97.79% of the depositors will receive the full amount of their deposits through DICGC insurance.
As of January 31, 2025, DICGC has already paid approximately ₹5.41 crore towards insured deposits.
Thus, the majority of depositors are unlikely to suffer major losses.
If you are a customer of Imperial Urban Co-operative Bank, here’s what you should do:
Wait for official communication from the appointed liquidator or DICGC regarding the claims process.
Submit your claim through the procedure outlined by the liquidator.
Ensure that your account details and KYC documents are updated to avoid delays.
Usually, DICGC settles the claims within 90 days from the date of receipt of complete claim forms from the liquidator.
The closure of Imperial Urban Co-operative Bank highlights the importance of banking regulation and customer deposit protection mechanisms like DICGC. Although the situation may seem alarming, depositors should stay calm and follow official instructions to claim their insured amounts.
For future banking decisions, it’s always a good idea to choose banks that have strong financial health and to spread your deposits across multiple banks if your total deposits exceed the ₹5 lakh insurance limit.
Stay tuned for more updates as the liquidation process moves forward.
