RBI Imposes Six-Month Restrictions On Valsad Mahila Nagrik Sahakari Bank, Prohibits Withdrawals
RBI said it has in the recent past engaged with the board and senior management of The Valsad Mahila Nagrik Sahakari Bank for improvement in its functioning.
The Reserve Bank of India (RBI) on Thursday imposed several restrictions on Valsad-based The Valsad Mahila Nagrik Sahakari Bank, including a prohibition on customer withdrawals, due to the lender's deteriorating financial position.
The restrictions in the form of 'Directions' will remain in force for six months from the close of business on Thursday.
According to the Directions, the bank cannot, without prior permission of the RBI, grant or renew any loans, make investments, incur liability, and dispose off any of its properties, among others.
"Considering the bank's present liquidity position, the bank has been directed not to allow withdrawal of any amount from savings bank or current accounts or any other account of a depositor but is allowed to set off loans against deposits...," the RBI said.
The Directions, it said are necessitated due to supervisory concerns emanating from the recent material developments in the bank, and to protect the interests of depositors of the bank.
RBI said it has in the recent past engaged with the board and senior management of The Valsad Mahila Nagrik Sahakari Bank for improvement in its functioning.
"However, lack of concrete efforts taken by the bank to address the supervisory concerns and to protect the interest of depositors of the bank, necessitated issuance of these Directions," it said.
The eligible depositors would be entitled to receive deposit insurance claim amount of their deposits upto Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
"The RBI continues to monitor the position of the bank and will take necessary actions including modifications of these Directions, as warranted, depending upon circumstances and in the interest of the depositors," RBI said.
The central bank also said the issue of the Directions should not per se be construed as cancellation of the banking license.
The bank will continue to undertake banking business subject to restrictions specified in the said Directions till its financial position improves.
