RBI restricts withdrawals from Maharashtra's Shankarrao cooperative bank

The RBI on Friday imposed several restrictions on Shankarrao Pujari Nutan Nagari Sahakari Bank Limited, Ichalkaranji, Kolhapur, including on withdrawals, in view of the lender's worsening financial position.

However, 99.84 per cent of the depositors are fully covered by the DICGC insurance scheme. Under the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance scheme, deposits of up to Rs 5 lakh are insured.

The RBI, in a statement, said the restrictions will remain in force for a period of six months from the close of business on May 13, 2022 and are subject to review.

"Considering the bank's present liquidity position, no amount from the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn, but are allowed to set off loans against deposits subject to the conditions...," it said.

It further said the issuance of the directions should not per se be construed as cancellation of the banking licence by RBI.

"The bank will continue to undertake banking business with restrictions as stated in the Directions till its financial position improves," it said.

The Reserve Bank added that it may consider modifications of the directions depending upon circumstances.

The bank cannot, without prior approval of RBI, grant or renew any loans and advances, make any investment, incur any liability, and dispose of any of its properties or assets, among other restrictions.