RBI Imposes Curbs On Sarvodaya Co-Operative Bank, Check Full Details Here

The limit will severely affect customers with cash needs exceeding the Rs 15,000 ceiling. The RBI also curbed the lending, investment, and deposit activities of the crisis-hit bank

The RBI noted that it is not cancelling the banking license of the lender and the restrictions will remain in force till the financial condition of the bank improves ( Image Source :Getty )

The Reserve Bank of India (RBI) imposed major restrictions on the Sarvodaya Co-operative Bank, in light of the bank’s worsening financial health. The banking regulator issued a withdrawal limit of Rs 15,000 on the bank’s customers regarding their accounts. These curbs will be effective starting April 16, 2024. 

The limit will severely affect customers with cash needs exceeding the Rs 15,000 ceiling. The RBI issued an official release and further curbed the lending, investment, and deposit activities of the crisis-hit bank. 

“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 April 15, 2024, a copy of which is displayed on the bank's website / premises for perusal by interested members of the public,” the release dated April 15, 2024, stated. 

Deposit Insurance Relief

The central bank said that eligible depositors will be entitled to receive deposit insurance on their deposits up to Rs 5 lakh only. The deposit insurance will be disbursed by the Deposit Insurance and Credit Guarantee Corporation under Section 18A of the DICGC Act (Amendment) 2021.

However, the RBI noted that it is not cancelling the banking license of the lender and the restrictions will remain in force till the financial condition of the bank improves. For now, the directions will be in effect for six months from the date of the release and will be subject to review based on the circumstances.