RBI Cancels HCBL Co-operative Bank's License Citing Financial Instability and Regulatory Non-Compliance

In a significant move that impacts thousands of depositors in Uttar Pradesh, the Reserve Bank of India (RBI) has cancelled the banking license of HCBL Co-operative Bank, headquartered in Lucknow. The decision, announced on Monday evening, was taken due to the bank's poor financial health, regulatory violations, and lack of viable prospects for revival.

Reasons Behind License Cancellation

As per the official press release by the RBI, the license of HCBL Co-operative Bank has been revoked under Section 56 read with Section 22 of the Banking Regulation Act, 1949. The following critical reasons were cited:

• Inadequate Capital: The bank failed to maintain the required minimum capital and reserve levels mandated by the RBI.

• Negative Financial Outlook: There were no realistic prospects of the bank becoming financially viable in the foreseeable future.

• Regulatory Non-Compliance: The bank was found to be in continuous violation of various provisions of the Banking Regulation Act.

• Risk to Depositors' Interests: The RBI determined that the bank's continued operation posed a serious threat to the interests of its depositors.

• Public Interest Concerns: The bank’s operations were deemed to be detrimental to the public interest.

Impact on Depositors

Despite the cancellation, depositors have some reason to remain calm. The Deposit Insurance and Credit Guarantee Corporation (DICGC) will provide insurance coverage up to ?5 lakh per depositor, in accordance with statutory norms.

According to information submitted by the bank to the RBI:

• Approximately 98.69% of depositors are eligible to receive full repayment of their deposits.

• The DICGC will initiate the process of disbursing insured amounts through the liquidator.

Regulatory Action & Liquidation

Following the RBI's directive:

• The Commissioner and Registrar of Co-operative Societies, Uttar Pradesh, has been asked to issue an order for winding up the bank.

• A liquidator will be appointed to manage the closure process and oversee the distribution of insured funds to depositors.

The RBI emphasized that continuing the operations of the bank would be against public interest and may cause further financial harm to its customers.

What Should Depositors Do Now?

• Visit the official DICGC website to understand the claim process.

• Keep your deposit records and identification ready for verification during the claim settlement.

• Avoid panic withdrawals or speculative actions—insured deposits up to ?5 lakh are protected by law.

RBI's Commitment to Financial Stability

This action reflects the RBI’s ongoing commitment to ensuring stability and integrity within India’s banking sector, particularly in the cooperative banking space. The central bank continues to monitor weak financial institutions and take strict action where depositor interests are at risk.

For further updates, depositors and stakeholders are advised to follow official announcements on the RBI’s website and the DICGC portal.

Share this News: