RBI imposes restrictions, including on withdrawals, on four cooperative banks
The Reserve Bank of India has imposed restrictions, including on withdrawals, on four cooperative banks in view of their deteriorating financial positions. These four banks include Saibaba Janata Sahakari Bank in Maharashtra, The Suri Friends’ Union Co-operative Bank Ltd at Suri in West Bengal along with two banks from Uttar Pradesh including United India Co-operative Bank Limited, Bijnor and National Urban Co-operative Bank Ltd., Bahraich.
A depositor of Saibaba Janata Sahakari Bank cannot withdraw more than 20,000 rupees from the bank while the withdrawal limit for The Suri Friends’ Union Co-operative Bank is 50,000 rupees. In the case of National Urban Co-operative Bank, the limit of withdrawal has been capped at Rs 10,000 per customer. The RBI has also imposed several restrictions on United India Co-operative Bank Limited, Bijnor, including a ban on withdrawals of funds by customers. The directions issued by the RBI to these four cooperative banks under the Banking Regulation Act, 1949, will remain in force for six months.
According to the RBI Press Releases in this regard, the banks 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 the 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 directives.
It has also been clarified that the Directions by the RBI should not per se be construed as a cancellation of a 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.