THIS bank’s customers can’t withdraw money for 6 months after RBI restrictions

Mumbai: The Reserve Bank of India has put restrictions on withdrawals from Nashik’s (Maharashtra) Independence Co-operative Bank Limited owing to the lender’s present liquidity position.

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the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn, but are allowed to set off loans against deposits subject to the conditions stated in the above RBI Directions. However, 99.89 percent of the depositors are fully covered by the DICGC insurance scheme, the RBI said.

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.

RBI further mentioned that the Chief Executive Officer of the aforesaid 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 February 09, 2021 a copy of which is displayed on the bank’s premises for perusal by interested members of the public. 

The Reserve Bank also added that it may consider modifications of the directions depending upon circumstances. The issue of the above Directions by the RBI should not per se be construed as cancellation of banking license by RBI. The bank will continue to undertake banking business with restrictions till its financial position improves. The Reserve Bank may consider modifications of these Directions depending upon circumstances.

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These Directions shall remain in force for a period of six months from the close of business on February 10, 2021 and are subject to review, RBI added.