Deccan Urban Co-operative Bank Withdrawal Capped At Rs1,000 from RBI

Deccan Urban Co-operative Bank Withdrawal Capped At Rs1,000 from RBI

Deccan Urban Co-operative Bank will continue to undertake banking business with restrictions till its financial position improves.

The Reserve Bank of India (RBI) has imposed a withdrawal cap of Rs 1,000 on customers of the Deccan Urban Co-operative Bank and has barred the lender from granting new loans or accepting deposits due to its liquidity position. The Karnataka-based lender is restricted to undertake any fresh business, including renewing any fresh loans or making new investments.

The central bank said that the directions for the bank 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the total balance across all savings bank or current accounts or any other account of a depositor may be allowed to be withdrawn, said the RBI In a statement late on Friday, February 19.

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The Deccan Urban Co-operative Bank, customers can set off their loans against deposits subject to conditions. The central bank said it issued the directions to bank’s chief executive officer. According to the Reserve Bank of India’s statement, 99.58 per cent of the depositors are fully covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance scheme, a wholly-owned subsidiary of the central bank itself, and provides insurance cover up to Rs 5 lakh on bank deposits.

The Reserve Bank added that putting the bank under specific restrictions should not be construed as a cancellation of its banking licence. Deccan Urban Co-operative Bank will continue to undertake banking business with restrictions till its financial position improves. It may consider modifications of the drections depending upon circumstances.

Over the past few years, the Reserve Bank of India has been cracking down on weak cooperative banks. In 2020, the central bank canceled permits of three cooperative banks and imposed restrictions on several other banks.

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