The Reserve Bank of India (RBI) has barred Deccan Urban Co-operative Bank Ltd from granting fresh loans or accepting deposits, while allowing customers of the Karnataka-based bank to withdraw not more than Rs 1,000 from their savings account for a period of six months.
The RBI has also asked the bank not to make fresh investments or incur any liability without its prior permission. It has also asked the lender to desist from disbursing any payment whether in discharge of its liabilities or otherwise, or dispose of any of its assets except as notified in the RBI direction.
“Considering the bank’s present liquidity position, a sum not exceeding Rs 1000 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the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn,” RBI said in a release on Friday.
Customers, however, can set off their loans against deposits subject to conditions, RBI said. Also Read: Amazon India to start its first manufacturing facility in Chennai
“However, 99.58 per cent of the depositors are fully covered by the DICGC insurance scheme,” said the regulator. The Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of RBI, provides insurance cover on bank deposits.
The RBI further said putting the bank under restrictions should not be construed as cancellation of its banking license. The bank will continue to undertake banking business with restrictions till its financial position improves.
The Reserve Bank may consider modifications of the directions depending upon circumstances. The directions are set to remain in force for six months from the close of business on February 19, 2021 and are subject to review, it added. Also Read: Make India one of the fastest growing economies; bring in fresh investments: FM to India Inc