The Reserve Bank on Monday imposed several restrictions on Etawah-based Nagar Sahakari Bank, including capping per customer withdrawal at Rs 10,000, necessitated due to supervisory concerns, for six months.
The RBI's directions to Nagar Sahakari Bank came into effect from the close of business on Monday.
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With the restrictions in place, the bank, without prior approval of RBI in writing, cannot grant loans, accept fresh deposits or borrow funds.
"Considering the bank's present liquidity position, the bank has been directed to permit withdrawal of a sum not exceeding Rs 10,000 from savings bank or current accounts or any other account of a depositor but is allowed to set off loans against deposits subject to the conditions...," RBI said.
The bank may incur expenditure in respect of certain essential items such as salaries of employees, rent, electricity bills, it added.
The directions, the RBI 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 further said it has in the recent past engaged with the board and senior management of the 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," the central bank said.
The eligible depositors would be entitled to receive deposit insurance claim amount of their deposits up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
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The central bank also said that the directions should not be construed as cancellation of the banking licence by RBI.
The bank will continue to undertake banking business subject to restrictions specified in the directions till its financial position improves, it added.
The RBI will continue to monitor the position of the bank and take necessary actions including modifications of the directions, as warranted, depending upon circumstances and in the interest of the depositors.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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