Blog: RBI Imposed Restrictions on 3 Cooperative Banks; Check name of the Bank and Reason – StudyCafe

RBI Imposed Restrictions on 3 Cooperative Banks; Check name of the Bank and Reason

The Reserve Bank of India(RBI) has imposed several restrictions on three cooperative banks including on the withdrawal of funds in view of their deteriorating financial condition.

These Banks are Durga Co-operative Urban Bank Ltd., Vijayawada, Jaiprakash Narayan Nagari Sahakari Bank Ltd., Basmatnagar, The Karmala Urban Co-operative Bank Ltd., Solapur.

The restrictions imposed under Section 56 of the Banking Regulation Act, 1949 will remain in force for six months.

Durga Co-operative Urban Bank’s Restrictions is that the Customers of this bank will not able to withdraw more than Rs.1,50,000 (Rupees one lakh fifty thousand only). Other restrictions are the bank shall not, without prior approval of RBI in writing grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI Direction dated July 28, 2022.

Whereas, restrictions on Jaiprakash Narayan Nagari Sahakari Bank Ltd., Basmatnagar, is that the bank shall not, without prior approval of RBI in writing grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI Direction dated July 28, 2022. Considering the bank’s present liquidity position, no amount from the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn, but are allowed to set off loans against deposits subject to the conditions stated in the above RBI Directions.

Lastly, Depositors of The Karmala Urban Co-operative Bank, Solapur, can only withdraw up to Rs 10,000 from their accounts and Other restrictions  imposed that the bank shall not, without prior approval of RBI in writing grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI Direction dated July 29, 2022.

The issue of the above Directions by the RBI should not per se be construed as cancellation of banking license by RBI. The bank will continue to undertake banking business with restrictions till its financial position improves. The Reserve Bank may consider modifications of these Directions depending upon circumstances.

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