RBI asks Meerut-based urban co-op bank not to issue new loans

Reserve Bank has asked Meerut-based Mercantile Urban Co-operative Bank not to grant or renew any loans and advances without its prior approval.
However, RBI clarified that its directions should not be construed as cancellation of banking licence and said the bank will continue to undertake banking business with restrictions.
"The Reserve Bank is satisfied that in the interest of the public, it is necessary to issue certain directions to the Mercantile Urban Co-operative Bank Ltd., Meerut," RBI said in a notification today.
Accordingly, Mercantile Urban Co-operative Bank Ltd, Meerut, from the close of business on October 6, 2015, "shall not, without prior approval in writing from the RBI grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits," it said.

Also, the bank has been restricted to disburse or agree to disburse any payment whether in discharge of its liabilities and obligations, enter into any compromise or arrangement and sell, transfer or dispose of any of its properties or assets.
It has also put exceptions that a sum not exceeding Rs 1,000 of the total balance in every savings bank or current account or any other deposit account may be allowed to be withdrawn by a depositor.
The instructions will remain in force for a period of six months from the close of business on October 6, 2015 and are subject to review from time to time, the RBI added.