The Reserve Bank of India (RBI) on Friday imposed a Rs 1,000 cap on withdrawals from all savings, existing or any other accounts of Deccan Urban Cooperative Bank. The restrictions shall keep in force for a period of six months as RBI appears to enhance the bank’s liquidity position, the central bank mentioned in a statement late Friday. The curbs come into force from the close of business enterprise on Friday, February 19, 2021. The withdrawal limit imposed on the bank is related to that imposed on PMC Bank, Lakshmi Vilas Bank, and Mantha Urban Cooperative Bank in the previous.
Deccan Urban Co-operative Bank, a Karnataka-based lender, has also been barred from granting or renewing any loans and advances. It has also been barred from generating any investment incurring any liability such as borrowal of funds and acceptance of fresh deposits disbursing or agreeing to disburse any payment, no matter if in the discharge of its liabilities and obligations, or otherwise.
The move will also restrict Deccan Urban Co-operative Bank’s potential to 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 in its path sent to the bank.
Although the withdrawal limit has been capped to just Rs 1,000 per account, RBI has mentioned that depositors will be permitted to set off loans against deposits topic to some situations. “The issue of the above Directions by the RBI should not per se be construed as a cancellation of the banking license by RBI. The bank will continue to undertake banking business with restrictions till its financial position improves,” the Reserve Bank of India mentioned.
RBI had earlier in November final year imposed a penalty of Rs 1 lakh on Deccan Urban Co-operative Bank, for contravention of the directions issued by it on the prohibition of loans and advances to directors. The central bank has earlier placed related restrictions on banks such as Yes Bank exactly where the withdrawal limit was capped to Rs 50,000. Similarly, PMC Bank’s withdrawal limit was also capped to Rs 50,000 but was later revised t0 Rs 1 lakh. Lakshmi Vilas Bank was the most current in the line exactly where the withdrawal limit was capped at Rs 25,000 per account.