Bhubaneswar, Feb. 17: The Reserve Bank of India today delicensed the Bhubaneswar Urban Co-operative Bank after the state government failed to take steps for its merger with any other co-operative society.

With the de-licensing of the bank, its business transactions have come to a halt. Besides, the security of the depositors’ money and the future of the 67 bank employees have become uncertain.

The next logical move will be to liquidate the bank.

Officials admitted that once the bank was liquidated, it would be difficult to collect the money that has been loaned.

While the bank has a liability of Rs 28 crore, it needs to collect nearly Rs 34 crore from the various people who have taken loans. Of this, Rs 19 crore is the principal amount and remaining is interest.

The bank has nearly 14,000 customers.

Confirming the development, chief executive officer (CEO) of the bank Patanjali Tripathy said: “We received the letter today. Now the process will be initiated to liquidate the bank within a month.”

The Reserve Bank of India will now ask the registrar, co-operative society, to initiate steps to liquidate the bank. A liquidator will be appointed to this effect by the state government to see that everything happens in a transparent manner.

Commissioner-cum secretary, co-operative, Bishnupada Sethi said: “Steps would be taken to return money of the small depositors. The depositors’ claim would be forwarded to the Deposit Insurance Guarantee Corporation of India, a subsidiary of the Reserve Bank, for the settlement. The cases of the customers, whose deposits are less than Rs 1 lakh, would be decided first. Those who have the deposits of more than Rs 1 lakh, would be decided after bank collects its money from the loanees.”

“We have already deployed three squads to collect the money. But with the de-licensing of the bank, it will be difficult to realise the money,” said a bank employee, who has not received his salary since March last year.

On the other hand, the chief executive of the bank maintained that the liquidator would also follow the same procedure of collecting money as the bank was doing it now.

“Once the money is collected from the loanees, it will be distributed among the customers,” said Tripathy.

Established in 1988, the Urban Co-operative Bank was making profits till 2001. However, with government evincing little interest in its promotion, the organisation started incurring losses. The bank has been under the direction of RBI under Section 35-A of the Bank Regulation Act, since January, 2004. In such a situation, a customer can only withdraw Rs 1 lakh from such a bank on emergency grounds such as a medical condition.

Later in 2012, the state cabinet had given a free hand to the co-operative department and the registrar of the co-operative societies to initiate steps for the merger of the bank. Three organisations, including the Pune-based Cosmos Co-operative Bank Society, had applied to take over the bank. But it had asked the government to take steps to collect outstanding dues, which is a precondition for merger.

Reacting sharply to the development, retired government official Chaitanya Mishra said: “After my retirement, I had deposited my life’s savings worth nearly Rs 20 lakh in the bank. Now I don’t know what to do.”