RBI Places Restrictions On Withdrawals From Independence Co-operative Bank, Nashik

The RBI has put restrictions on withdrawals from Independence Co-operative Bank Limited, Nashik because of the lender's present liquidity position.

However, 99.89% of the depositors are fully covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance scheme, the Reserve Bank said in a statement on Wednesday.

As per the insurance scheme, every depositor in a bank is entitled to receive deposit insurance claim amount of his/her deposits up to Rs 5 lakh from the DICGC.

The restrictions will remain in force for a period of six months.

"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the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn, but are allowed to set off loans against deposits subject to...conditions...," the central bank said.

The RBI has also put certain other restrictions on the bank from the close of business on Wednesday.

It said the chief executive Officer of the bank will not, without prior approval of RBI, grant or renew any loans and advances, make any investment, incur any liability, and disburse any payment, among others.

It further said the issue of the directions to Independence Co-operative Bank Limited should not per se be construed as cancellation of banking licence by RBI.

The bank will continue to undertake banking business with restrictions till its financial position improves, it added.

The Reserve Bank also added that it may consider modifications of the directions depending upon circumstances.