RBI Deregisters Cuddalore-Villupuram Co-op Employees Bank as a Co-operative Bank [Read Notification]

The Reserve Bank of India (RBI) has officially declared that The Cuddalore and Villupuram District Central Co-operative Bank’s Employees Cooperative Bank Ltd., based in Cuddalore, Tamil Nadu, is no longer recognized as a co-operative bank under the Banking Regulation Act, 1949.

The RBI issued a notification dated March 24, 2025, exercising its powers under Section 36A(2) read with Section 56 of the Act. The decision was published in the Gazette of India on April 11, 2025, confirming that all provisions of the Act applicable to co-operative banks will cease to apply to the said bank, except matters undertaken before this notification​.

This means that the bank can no longer operate as a co-operative bank, and it will no longer enjoy the regulatory privileges or responsibilities associated with such institutions.

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The RBI has not detailed the specific reasons behind the decision but such actions are typically taken in cases of persistent regulatory non-compliance, governance failures, financial irregularities, or insolvency concerns.

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The notification was signed by R. Lakshmi Kanth Rao, Executive Director at the RBI, and serves as a formal derecognition of the bank's cooperative status, impacting its governance, operations, and compliance requirements under the RBI’s regulatory framework.

What Are Co-operative Banks?

Co-operative banks are financial institutions that are owned and operated by their members, typically formed to serve the mutual financial needs of a community, group, or region. They function under a dual regulatory framework, overseen by both the RBI and the respective state governments through cooperative departments.

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Key features:

• Co-operative banks are owned by their customers, who are also shareholders.
• They follow a "one member, one vote" policy, irrespective of shareholding.
• These banks often cater to specific geographic areas or communities, including farmers, small traders, and salaried individuals.
• They are not-for-profit entities, and co-operative banks often offer lower lending rates and service charges.
• Co-operative banks in India operate at three levels: Urban Co-operative Banks (UCBs), District Central Co-operative Banks (DCCBs) and State Co-operative Banks (SCBs)

To Read the full text of the Notification CLICK HERE

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