RBI Caps Deccan Urban Co-Operation Bank's Withdrawal Limit To Rs 1000; New Loans, Deposits Not Allowed
The bank has been restricted to undertake any fresh business, including renewing any fresh loans or making new investments. The customers can set off their loans against deposits subject to conditions, as per the directions issued by the RBI to Urban Co-operative Bank’s Chief Executive Officer.
New Delhi: Considering the Karnataka-based lender’s “present liquidity position”, the Reserve Bank of India (RBI) has imposed a Rs. 1,000 withdrawal cap on the Deccan Urban Co-operative Bank customers besides barring the bank from granting new loans or accepting deposits for six months from the close of business on February 19 and subject to review. ALSO READ | 'Create Guidelines In 6 Months To Ensure Locker Facility Management In Banks,' Supreme Court Tells RBI
The bank has been restricted to undertake any fresh business, including renewing any fresh loans or making new investments without its prior permission.
The customers can set off their loans against deposits subject to conditions, as per the directions issued by the RBI to Urban Co-operative Bank’s Chief Executive Officer. The statement issued on Friday by the central bank states 99.58 percent of the depositors are fully covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance scheme.
"Considering the bank's present liquidity position, a sum not exceeding Rs 1000 only of the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn," RBI said in a release on Friday.
Established for the purpose of providing insurance of deposits and guaranteeing of credit facilities, the DICGC is a wholly-owned subsidiary of the RBI.
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Asserting that putting the Urban Co-operative Bank under specific restrictions should not be construed as a cancellation of its banking licence, the RBI said it may consider modifications of the directions depending on the circumstances.
The Central bank, in its release, also mentioned that directions are set to remain in force for six months from the close of business on February 19, 2021 and are subject to review.
The bank can, however, continue to undertake banking business with restrictions till its fiscal situation improves.
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