Blog: RBI imposes restrictions on two co-operative banks, caps fund withdrawal amount | Mint – Mint

In the wake of deteriorating financial position two Uttar Pradesh-based cooperative banks, the Reserve Bank of India on Thursday said it has imposed several restrictions, including on fund withdrawals. Notably, the two lenders are Lucknow Urban Co-operative Bank and Urban Co-operative Bank Limited, Sitapur. 

According to news agency PTI report citing RBI statement, the restrictions under the Banking Regulation Act will remain in force for six months. Customers of Lucknow Urban Co-operative Bank will not able to withdraw more than 30,000, the RBI statement noted, adding that the withdrawal limit in the case of Urban Co-operative Bank is 50,000 per customer. It is important to note that the two banks, without permission of the RBI, cannot grant loans, make any investment, incur any liability — including borrowing of funds and acceptance of fresh deposits, disburse or dispose of properties or assets. 

Meanwhile, in another development, RBI on Wednesday suggested that banks and other financial institutions could consider eliminating the use of paper at their branches as well as introduce e-receipts at ATMs. In a discussion paper on ‘Climate Risk and Sustainable Finance’, the Reserve Bank of India (RBI) said it intends to prepare a strategy based on the global best practices on mitigating the adverse impacts of climate change, learnings from participation in standard-setting bodies, according to news agency PTI report.

The thrust of the strategy would include a broad guidance for all RBI Regulated Entities (REs) to have appropriate governance; strategy to address climate change risks and risk management structure to effectively manage them from a micro-prudential perspective, the report said.

Additionally, the report noted that the central bank has proposed climate risk-related financial disclosure and reporting for REs, capacity building, and voluntary initiatives. On a voluntary basis, the REs should set up targets for increasing funding to green projects over short, medium and longer term towards certain identified sectors.

“In order to green the banking processes by making them more environment-friendly, REs could consider converting their branches to green branches by eliminating the use of paper in their operations, introducing option of e-receipts at their ATMs,” according to the discussion paper.

(With inputs from PTI) 

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