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RBI puts restriction on this Bank, Customers can withdraw only Rs.15,000 from their accounts


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The Reserve Bank of India (RBI) has taken a significant step by introducing several limitations on the operations of Sarvodaya Co-operative Bank, which is based in Mumbai. Starting from April 16, customers of the bank will now face a maximum withdrawal limit of Rs 15,000 from their accounts. This decision has been made due to the bank’s deteriorating financial health, as stated by the RBI in a press release.

Impact on Customers

Customers of Sarvodaya Co-operative Bank can withdraw only Rs 15,000 from their bank accounts. RBI has confirmed that the customers are eligible to claim an insurance amount on deposits up to a limit of Rs 5 lakh. This deposit insurance is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC).

Strict Limitations on Banking Activities

Under the new directives falling under Section 35A of the Banking Regulation Act, 1949, Sarvodaya Co-operative Bank faces strict limitations on its banking activities. The bank is no longer permitted to issue or renew loans and advances, make new investments, or incur additional liabilities without prior approval from the RBI. Additionally, the bank is restricted from making any payments to discharge its liabilities unless explicitly approved.

Bank’s License and Future Operations

It is important to note that these measures do not indicate a revocation of the bank’s license. The RBI has clarified that while the bank will continue to operate, it will do so under these constraints until there is an improvement in its financial condition. The imposed restrictions are set to last for six months and will be reviewed periodically.

Similar Restrictions on Shirpur Merchants’ Co-operative Bank

Similarly last week the RBI imposed various restrictions on Shirpur Merchants’ Co-operative Bank in Maharashtra due to its deteriorating financial position. These restrictions included limitations on customer fund withdrawals.

Deposit Insurance Process and Timelines

Depositors who are eligible for deposit insurance can claim up to Rs 5 lakh by submitting their willingness to the DICGC, as per the regulations. Deposits up to Rs 5 lakh will be refunded within 90 days from the start of the moratorium. This period is divided into two phases: the first 45 days for the bank to gather and submit claim details to the DICGC, followed by another 45 days for the DICGC to process and pay the claims.

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