RBI Imposes Restrictions, Withdrawal Caps on 4 Cooperative Banks
Moneylife Digital Team 12 July 2022
The Reserve Bank of India (RBI) has imposed various restrictions on on four cooperative banks. The restrictions have been imposed for six months and it includes cap on withdrawals for the depositors. The central bank has imposed restrictions keeping in view the deteriorating financial position of these four cooperative banks. The four banks being put under restrictions by RBI are: Ramgarhia Co-operative Bank, New Delhi; Sahebrao Deshmukh Co-operative Bank, Mumbai; Sangli Sahakari Bank, Mumbai; and Sharada Mahila Co-operative Bank Limited, Tumkur, Karnataka. These restrictions have been put under the Banking Regulation Act, 1949.
As per RBI's directives, the restrictions became effective after the closure of business hours on Friday, i.e., 8 July 2022. RBI issued notices in this regard and said that without prior approval of RBI, these four banks cannot grant or renew any loans, make investments or accept fresh deposits.
Under RBI's directions, a cap has also been imposed on withdrawals by depositors of these four cooperative banks.
In the case of Ramgarhia Co-operative Bank and Sahebrao Deshmukh Cooperative Bank, the cap is Rs50,000 per depositor, while in the case of Sangli Sahakari Bankthe cap is Rs45,000 per deposit. In the case of Sharada Mahila Co-operative Bank, a depositor can withdraw a maximum of Rs7,000.
In separate statements, the central bank said that the issue of directions "should not per se be construed as a cancellation of banking license" by RBI. In each case, the banking regulator said that it may consider modifications of the directions, depending on  the circumstances.
3 months ago
A good move in the right direction. This is also the time for a forensic audit of these banks to fix things right away. A stitch in time saves nine.
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