Mumbai: The RBI on Wednesday imposed several restrictions on The Gauhati Cooperative Urban Bank, including capping the withdrawal by customers at Rs 35,000, in view of the deteriorating financial position of the lender. The restrictions in the form of 'Directions' came into effect from the closing of business hours on Tuesday, and remain in force for six months.
According to the directions, the cooperative bank, without prior approval of the RBI, cannot grant or renew loans, make investments, incur any liability, disburse any payment, whether in discharge of its liabilities and obligations, among others.
"Considering the bank's current liquidity position, the bank has been directed to permit withdrawal of a sum not exceeding Rs 35,000 of the total balance held in savings bank or current accounts or any other account of a depositor, but is allowed to set off loans against deposits," the Reserve Bank of India (RBI) said.
The RBI said it has, in the recent past, engaged with the Board and senior management of The Gauhati Cooperative Urban Bank for improvement in its functioning.
However, the lack of concrete efforts taken by the bank to address the supervisory concerns and to protect the interests of depositors of the bank necessitated the issuance of the directions, it added.
The eligible depositors would be entitled to receive the deposit insurance claim amount of their deposits up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
The RBI also said that the issue of the directions should not, per se, be construed as cancellation of the banking license.
"The bank will continue to undertake banking business subject to restrictions specified in the said directions till its financial position improves," it added.
The RBI will continue to monitor the position of the bank and will take necessary actions, including modifications of the directions, as warranted, depending upon circumstances and in the interest of the depositors.
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