Deccan Urban Co-operative Bank: RBI Restricts Withdrawal at Rs1,000 for 6 Months
One more bank from the cooperative sector has come under directions from the Reserve Bank of India (RBI). Last week, the Reserve Bank has put Vijayapur, Karnataka-based Deccan Urban Co-operative Bank Ltd under restrictions. For the next six months, account holders and depositors of the bank will not be able to withdraw more than Rs1000 from their account.
In a release, RBI says, "Considering the bank's present liquidity position, a sum not exceeding Rs1,000 of the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn, but are allowed to set off loans against deposits subject to the conditions stated in the above RBI directions.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, 99.58% of the depositors are fully covered by the DICGC insurance scheme."
Issuance of its directions should not be considered as cancellation of banking license of Deccan Urban Co-operative Bank, the RBI clarified. "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," it added.
As per the directions issued by the central bank, the chief executive (CEO) of the bank cannot, without prior approval of RBI in writing, grant or renew any loans and advances, make any investment, and incur any liability including borrowal of funds and acceptance of fresh deposits. Further, he cannot 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, the central bank says.