The Reserve Bank of India placed certain restrictions on four cooperative banks on Friday (RBI). The restrictions, which also include a withdrawal limit for depositors, have been in effect for six months.
The Indian central bank has imposed restrictions due to the dire financial circumstances of these four cooperative banks. Sangli Sahakari Bank in Mumbai, Ramgarhia Co-operative Bank in New Delhi, Sahebrao Deshmukh Co-operative Bank in Mumbai, and Sharada Mahila Co-operative Bank Limited in Tumkur, Karnataka are the four institutions that the RBI has limited. The 1949 Banking Regulation Act imposes these limitations.
As per the RBI’s directives, the restriction went into force on Friday, July 8, 2022, after business hours. According to a notification the RBI issued in this regard, these four banks were not permitted to extend or renew any loans, make investments, or accept new deposits without prior clearance from the RBI.
A limit has also been imposed on withdrawals by depositors of these four cooperative banks in accordance with instructions from the RBI.
The maximum deposit is $50,000 for each of Ramgarhia Co-operative Bank, Sahebrao Deshmukh Co-operative Bank, and Sangli Sahakari Bank, and $45,000 for the other two institutions.
At Sharada Mahila Co-operative Bank, the most a depositor can withdraw is 7,000. The central bank of India stated in separate announcements that the RBI’s issuance of directions “should not per se be viewed as a termination of banking licence.”
According to the Reserve Bank of India, it may consider altering the directions depending on the circumstances in each case.
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