Deccan Urban Co-op Bank withdrawals capped at Rs 1000 per customer; RBI bars from lending, investing

By | February 20, 2021

Deccan City Co-op Financial institution withdrawals capped at Rs 1000 per buyer; RBI bars from lending, investing

RBI, Deccan Urban cooperative bank(Picture- REUTERS)

The Reserve Financial institution of India (RBI) on Friday imposed a Rs 1,000 cap on withdrawals from all financial savings, present or some other accounts of Deccan City Cooperative Financial institution. The restrictions shall keep in drive for a interval of six months as RBI seems to enhance the financial institution’s liquidity place, the central financial institution stated in a press release late Friday. The curbs come into drive from the shut of enterprise on Friday, February 19, 2021. The withdrawal restrict imposed on the financial institution is just like that imposed on PMC Financial institution, Lakshmi Vilas Financial institution, and Mantha City Cooperative Financial institution up to now.

Deccan City Co-operative Financial institution, a Karnataka-based lender, has additionally been barred from granting or renewing any loans and advances. It has additionally been barred from making any funding; incurring any legal responsibility together with borrowal of funds and acceptance of recent deposits; disbursing or agreeing to disburse any cost, whether or not within the discharge of its liabilities and obligations, or in any other case.

The transfer will even prohibit Deccan City Co-operative Financial institution’s capacity to enter into any compromise or association and promote, switch or in any other case get rid of any of its properties or belongings besides as notified within the RBI in its path despatched to the financial institution.

Though the withdrawal restrict has been capped to only Rs 1,000 per account, RBI has stated that depositors might be allowed to set off loans in opposition to deposits topic to some situations. “The problem of the above Instructions by the RBI shouldn’t per se be construed as a cancellation of the banking license by RBI. The financial institution will proceed to undertake banking enterprise with restrictions until its monetary place improves,” the Reserve Financial institution of India stated.

RBI had earlier in November final yr imposed a penalty of Rs 1 lakh on Deccan City Co-operative Financial institution, for contravention of the instructions issued by it on the prohibition of loans and advances to administrators. The central financial institution has earlier positioned related restrictions on banks similar to Sure Financial institution the place the withdrawal restrict was capped to Rs 50,000. Equally, PMC Financial institution’s withdrawal restrict was additionally capped to Rs 50,000 however was later revised t0 Rs 1 lakh. Lakshmi Vilas Financial institution was the most recent within the line the place the withdrawal restrict was capped at Rs 25,000 per account.

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