RBI imposes restrictions on 2 co-op banks; customers cannot withdraw funds

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Customers of Karnataka-based Sri Mallikarjuna Pattana Sahakari Bank Niyamita and Maharashtra-based Nashik Zilla Girna Sahakari Bank will not be able to withdraw funds from their accounts with the imposing restrictions on the lenders.

The restrictions have been imposed on the two cooperative by the Reserve Bank of India in wake of their deteriorating financial positions.

The restrictions on Sri Mallikarjuna Pattana Sahakari Bank Niyamita, Maski (Karnataka) and Nashik Zilla Girna Sahakari Bank, Nashik (Maharashtra) will remain in force for six months, as per two statements issued by the central bank.

In the case of Nashik Zilla Girna Sahakari Bank, the said 99.87 per cent of the depositors are fully covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance scheme.

Also, 99.53 per cent of the depositors of Sri Mallikarjuna Pattana Sahakari Bank Niyamitaare are fully covered by the DICGC insurance scheme.

“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the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn, but are allowed to set off loans against deposits…,” the said in regards to the Karnataka-based bank.

A similar condition has also been imposed on the Maharashtra-based lender.

In wake of the restrictions, the two cannot, without prior approval of the RBI grant or renew any loans, make any investment, incur any liability, including borrowal of funds and acceptance of fresh deposits.

In both cases, the RBI said the issue of the directions under the Banking Regulation Act should not per se be construed as a cancellation of banking licenses issued to them.

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

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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