Cessation of Banking Licence.

Vide a press release no. 2024-2025/2087, Mr. Puneet Pancholy, Chief General Manager of the Reserve Bank of India has notified the larger section of the society that:

The licence, dated March 21, 2000, granted to The Cuddalore and Villupuram District Central Co-operative Bank’s Employees Cooperative Bank Ltd., Cuddalore – 607001, Tamil Nadu to carry on banking business in India under Section 22 read with Section 56 of the Banking Regulation Act, 1949, stands cancelled with effect from the close of business on February 6, 2025. This makes it obligatory on the part of The Cuddalore and Villupuram District Central Co-operative Bank’s Employees Cooperative Bank Ltd., Cuddalore – 607001, Tamil Nadu to stop conducting the business of ‘banking’ within the meaning of section 5(b) read with Section 56 of the Act ibid, including acceptance of deposits from non-members with immediate effect.

It is of importance that: Section 5 (b) of the Banking Regulations Act, 1949 defines ‘banking’ as accepting for the purpose of lending or investment, of deposits of money from the pubic, repayable on demand or ‘otherwise and withdrawal by cheques, drafts, order or otherwise.

Merely because the petitioners the co-operative societies in question are required to advance loans to their members, they do not cease to be co-operative societies governed by the Act nor can they be treated as banking companies. It is also not possible to hold that these activities of the petitioners amount to “banking” as contemplated under the Banking Regulation Act, 1949, inasmuch as these co-operative societies are not established for the purpose of doing “banking” as defined in Sec. 5 (b) of the Banking Regulation Act, 1949.

Therefore, The Cuddalore and Villupuram District Central Co-operative Bank’s Employees Cooperative Bank Ltd., Cuddalore – 607001, Tamil Nadu would continue to remain operational as a non-banking institution under Section 36A (2) read with Section 56 of the Banking Regulation Act, 1949.

[Section 36A (2): Where the Reserve Bank is satisfied that any such banking company has repaid, or has made adequate provision for repaying all deposits accepted by the banking company, either in full or to the maximum extent possible, the Reserve Bank may, by notice published in the Official Gazette, notify that the banking company has ceased to be a banking company within the meaning of this Act, and thereupon all the provisions of this Act applicable to such banking company shall cease to apply to it, except as respects. things done or omitted to be done before such notice].

Consequently, furthermore, The Cuddalore and Villupuram District Central Co-operative Bank’s Employees Cooperative Bank Ltd., Cuddalore – 607001, Tamil Nadu shall ensure to repay unpaid and unclaimed deposits of non-members held by it, whenever demanded, even after being notified as a non-banking institution.

Courtesy: Reserve Bank of India

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