RBI bans premature withdrawal of FDs from Kapol Bank

Supersedes board of directors at the mumbai based co-operative bank

The Reserve Bank of India has banned premature withdrawal of fixed deposits from Kapol Co-operative Bank (Kapol Bank), a city-based urban cooperative bank.

On Friday, Kapol Bank had, in a statement, said the banking regulator had appointed an administrator to run its operations. RBI also superseded the bank’s board of directors, owing to concern over its conduct. Election to appoint directors on the board would be held after the bank’s operations and financial parameters stabilised, a bank executive said.

Kapol Bank said RBI had curbed premature withdrawal of fixed deposits and loans against fixed deposits. As of March-end, the bank’s deposits stood at Rs 1,039 crore, while its loan portfolio was Rs 614 crore.

The bank said customers could carry out normal operations in their current and savings accounts. All maturing fixed deposits would be paid to depositors on the date of maturity, the bank said.

According to data on the bank’s website, Kapol Bank, established in 1939, has 250,000 customers and 67,963 shareholders. It has 14 branches in this city and one in Surat, with a staff strength of 395.

The bank’s accounts for 2013-14 are yet to be finalised. Its net profit for 2012-13 dropped to Rs 1.8 crore from Rs 2.8 crore for 2011-12, while its interest income rose from Rs 71 crore to Rs 83 crore.