The Reserve Bank of India (RBI) announced on July 19 that it had revoked the license of Uttar Prtadesh-based United India Co-operative Bank Limited because the bank did not have sufficient capital.

The bank will then cease banking operations effective close of business on July 19, 2023, RBI said. The RBI has asked the Commissioner and Registrar of the Uttar Pradesh Cooperative to issue an order to liquidate the bank and appoint a liquidator for the bank, the central bank said.

The central bank has revoked the bank’s license as the bank does not have sufficient capital and earnings prospects and the bank’s continued existence harms the interests of its depositors, RBI said in a press release.

The bank would not be able to fully pay off its current depositors in its current financial position and the public interest would be harmed if the bank were allowed to continue its banking operations, RBI said.

RBI has prohibited the bank from accepting further deposits with immediate effect. According to data provided by the bank, 99.98 percent of depositors are eligible to receive the full amount of their deposits from DICGC, RBI said.

RBI cracks down on failing credit unions. According to an analysis by Moneycontrol, the company revoked the licenses of at least nine banks and fined wrongdoers 114 times in fiscal 2023.

Co-operative banks, which have played a crucial role in expanding banking services in villages and semi-rural areas, have had to contend with a range of problems, from double regulation and weak finances to interference from local politicians.