RBI imposes business restrictions on 2 co-operative banks citing material supervisory concerns

Reserve Bank of India

The Reserve Bank of India (RBI) on June 12 imposed business restrictions on two co-operative banks citing material supervisory concerns.

These banks are The Karwar Urban Co-operative Bank and The Amanath Co-operative Bank, the RBI said in a release.

The RBI said the directions shall remain in force for a period of six months for both banks from the close of business on June 12, 2024 and are subject to review.

The central bank has asked both banks not to grant or renew any loans and advances, make any investment, incur any liability including the borrowal of funds and acceptance of fresh deposits, the RBI said in a release.

The central bank also asked these banks not to disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets, the release said.

The RBI said considering The Karwar Urban Co-operative Bank's present liquidity position, the bank has been directed not to allow withdrawal of any amount from savings bank, current accounts or any other account of a depositor. However, setting off loans against deposits is allowed.

Further, on the withdrawal of deposit front of The Amanath Co-operative Bank, the central bank said a sum not exceeding Rs 60,000 of the total balance across all savings or current account or any other account of a depositor, may be allowed to be withdrawn.

The eligible depositors of both the banks would be entitled to receive deposit insurance claim amount for their deposits up to a monetary ceiling of Rs 5 lakh in the same capacity and in the same right, within 90 days, from the Deposit Insurance and Credit Guarantee Corporation (DICGC), the release added.

The RBI said both banks may incur expenditure in respect of certain essential items such as salaries of employees, rent, electricity bills, among others.