The Reserve Bank of India (RBI), on May 11, said it has extended the period of restriction on two co-operative banks due to their deteriorating financial condition.
The RBI has extended the period of restrictions on Solapur-based The Laxmi Co-operative Bank for three months from May 12 to August 11. The restrictions stipulate certain restrictions and/or ceilings on withdrawal or acceptance of deposits.
In November last year, the RBI had imposed restrictions on The Laxmi Co-operative Bank, including a cap of Rs 1,000 on withdrawals for customers, due to a deterioration in its financial position. The restrictions were imposed under the Banking Regulation Act, 1949, for a period of six months and were subject to review.
That apart, the central bank has also extended the period of restriction on Bengaluru-based Sri Guru Raghavendra Sahakara Bank Niyamitha for a period of six months from May 11, 2022, to November 10, 2022, subject to review.
In January 2020, the RBI imposed restrictions on the lender and restricted withdrawals to Rs 35,000 which was subsequently increased to Rs 1 lakh. It had also directed the bank to not grant or renew any loans or advances.
The central bank said it was satisfied that in the public interest, it is necessary to extend the period of operation.The RBI has been tightening its noose around co-operative banks to ensure better compliance and protect the interests of depositors. In September 2019, the RBI had placed curbs on erstwhile Punjab and Maharashtra Cooperative Bank amid alleged irregularities in certain loan accounts.