Depositors can’t pull out funds from United India Coop Bank

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Depositors of Uttar Pradesh-based United India Co-operative Bank Limited will not be able to withdraw deposits lying in their savings accounts. The Reserve Bank of India has banned depositors from withdrawing cash from their accounts in the co-operative bank. The apex bank has said that the cooperative bank does not have adequate capital to support withdrawal. The RBI cancelled bank’s licence with effect from closing hours of Wednesday, July 19, 2023.

How can depositors get back their money?

The only way depositors can withdraw their money from their account they are holding with the co-operative bank is by exercising rights they are entitled to under the Deposit Insurance and Credit Guarantee Corporation Act, 1961. Under the DICGC Act, 1961 every citizen of this country who has a bank account with any type of bank is entitled to five lakh rupees of his total bank deposits. The bank account holder will get back maximum of only five lakh rupees irrespective of total deposits made in all types of bank accounts. Be it savings account, fixed deposits or recurring deposits, he will get back maximum of only five lakh rupees from one bank. If the sum total of deposits made in savings account, fixed deposits and recurring deposits is aggregate of seven lakh rupees. According to the DICGC Act, 1961, he will get back only five lakh rupees from one bank. His residual deposit of two lakh rupees will unfortunately will be lost.

So, every account holder of United India Co-operative Bank Limited will get back only five lakh rupees from his own deposits.

When will the money be returned?

The RBI has said that the process of settlement of stuck bank deposits will only start on bank’s liquidation. The liquidation process of the co-operative bank can take quite a bit of time.

Claim settlement process:

Bank account holders will have to approach their respective branches of United India Co-operative Bank Limited in which they are holding their account. They will have to file claim against deposits made. An assigned liquidator will then compute the final claim list and submit it to the DICGC. RBI’s corporation is liable to disburse the claim amount of depositors to the liquidator within two months of submission of the claim list. Finally, the liquidator will disburse the claim amount to each bank account holder.