Pen Urban Co-Op Bank's depositors deprived of benefits under amended law: Utagi

An organisation representing depositors of Pen Urban Cooperative Bank has sought the intervention of Union Finance Minister Nirmala Sitharaman and RBI, alleging delay in compensation under amended provisions of DICGC Act due to procedural hurdles.

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Vishwas Utagi, Secretary of the Bank Depositors Protection & Welfare Society (BDPWS), has submitted a memorandum to the RBI and Sitharaman, seeking urgent relief for depositors of Pen Urban Co-Op Bank Ltd (PEN). The bank's license was withdrawn by RBI, leading to a liquidation process that has been ongoing since 2012.
Out of 1,58,000 depositors, 99% are holding deposits under Rs 5 lakh, thus eligible for relief under the amended provisions of the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act.

Despite the 2021 amendment, these depositors have yet to benefit from the promised compensation due to procedural and legal hurdles, Utagi stated. The Bombay High Court has stayed the RBI's action, and the next hearing is scheduled for December 13. This prolonged legal battle has caused significant uncertainty for the depositors, many of whom are elderly and financially vulnerable, Utagi claimed.

The DICGC amendment in August 2021 aimed to provide relief by ensuring that depositors of cooperative banks liquidated or whose licenses were withdrawn, would receive payments of up to Rs 5 lakh within 90 days of notification by the RBI. However, this has not been implemented yet for the Pen Urban Co-Op Bank depositors.

PTI COR NSK 12101813