RBI Imposes Restrictions, Withdrawal Caps, On 4 Co-Op Banks

The Reserve Bank on Friday imposed several restrictions, including a cap on withdrawals for the depositors, on four cooperative banks for six months given their deteriorating financial positions. The banks on which restrictions or Directions under the Banking Regulation Act, 1949 have been imposed are Ramgarhia Co-operative Bank, New Delhi; Sahebrao Deshmukh Co-operative Bank, Mumbai; Sangli Sahakari Bank, Mumbai; and Sharada Mahila Co-operative Bank Limited, Tumkur, Karnataka.

The restrictions came into effect after the close of business on Friday and will remain in force for six months, the Reserve Bank said in a statement while issuing the directions under the Banking Regulation Act, 1949. Among other things, the four banks cannot, without prior approval of the RBI, grant or renew any loans, make investments or accept fresh deposits.

Under the directions, a cap has also been imposed on withdrawals by depositors. In the case of Ramgarhia Co-operative Bank and Sahebrao Deshmukh Cooperative Bank, the cap is Rs 50,000 per depositor, while it is Rs 45,000 in the case of Sangli Sahakari Bank. A depositor in Sharada Mahila Co-operative Bank can withdraw a maximum of Rs 7,000.

In separate statements, the central bank said the issue of directions "should not per se be construed as a cancellation of banking license" by the RBI. In each case, the Reserve Bank said it may consider modifications of the directions depending upon circumstances.

(PTI)