Deccan Urban Co-operative Bank Withdrawls Capped At Rs 1,000; RBI Bars Loans, Deposits

The central bank imposed the withdrawl cap on Deccan Urban Co-op bank citing its financial position

The Reserve Bank of India (RBI) has imposed a withdrawal cap of Rs 1,000 on customers of the Deccan Urban Co-operative Bank and has barred the lender from granting new loans or accepting deposits due to its liquidity position. The Karnataka-based lender is restricted to undertake any fresh business, including renewing any fresh loans or making new investments. The central bank said that the directions for the bank will remain in force for six months from the close of business on February 19 and are subject to review. ” Considering the bank’s present liquidity position, a sum not exceeding Rs 1,000 only of the total balance across all savings bank or current accounts or any other account of a depositor may be allowed to be withdrawn, said the RBI in a statement late on Friday , February 19. (Also Read: Center Caps Withdrawal From Lakshmi Vilas Bank At ₹ 25,000 Till December 16)

The Deccan Urban Cooperative Bank customers can set off their loans against deposits subject to conditions. The central bank said it issued the directions to bank’s chief executive officer. According to the Reserve Bank of India’s statement, 99.58 per cent of the depositors are fully covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance scheme, a wholly-owned subsidiary of the central bank itself, and provides insurance cover up to Rs. 5 lakh on bank deposits.

The Reserve Bank added that putting the bank under specific restrictions should not be construed as a cancellation of its banking license. Deccan Urban Co-operative Bank will continue to undertake banking business with restrictions till its financial position improves. It may consider modifications of the drections depending upon circumstances.

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Over the past few years, the Reserve Bank of India has been cracking down on weak cooperative banks. In 2020, the central bank canceled permits of three cooperative banks and imposed restrictions on several other banks. (Also Read: Lakshmi Vilas Bank-DBS Bank Deal: Here Is All You Need To Know)

In November last year, The Reserve Bank of India had imposed a penalty of Rs 1 lakh on Deccan Urban Co-operative Bank, for the contravention of the directions issued by it on the prohibition of loans and advances to directors. The central bank has earlier placed similar restrictions on PMC Bank, whose withdrawal limit was also capped to Rs 50,000 but was later revised to Rs 1 lakh. The withdrawal limit of Lakshmi Vilas Bank (LVB) was also capped at Rs 25,000 per account in November last year.

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Disclaimer: This post has not been edited by our staff and is published from a syndicated feed. The Original Source of this post can be found at Source link

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