RBI puts Rs 1,000 withdrawal cap on Deccan Urban Cooperative Bank

The Reserve Bank of India (RBI) has imposed a withdrawal cap of Rs 1,000 on customers of Deccan Urban Cooperative Bank and barred the Karnataka-based lender from granting fresh loans or accepting deposits.

The bank cannot undertake any fresh business, including giving new loans and taking fresh deposits, said the RBI adding that the directions will remain in force for six months from the close of business on February 19 and are subject to review.

"Considering the bank's present liquidity position, a sum not exceeding Rs 1,000 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the total balance across all savings bank or current accounts or any other account of a depositor may be allowed to be withdrawn," the RBI said in a statement late on Friday.

Bank customers can set off their loans against deposits subject to conditions. The RBI said it issued the directions to bank's chief executive officer.

However, 99.58 per cent of the depositors are fully covered by the DICGC insurance scheme, said the RBI. The Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of RBI, provides insurance cover up to Rs 5 lakh on bank deposits.

The RBI further said putting the bank under restrictions should not be construed as cancellation of its banking licence. The bank will continue to undertake banking business with restrictions till its financial position improves.

The RBI has been cracking down on weak cooperative banks over the past few years. In 2020, the RBI cancelled permits of three cooperative banks and imposed restrictions on several other banks.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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