The Reserve Bank has announced severe restrictions on three cooperative banks in the last two days. These include two banks from Maharashtra, the Nashik Zilla Girna Sahakari Bank Limited and the Raigad Sahakari Bank besides Karnatka-based Sri Mallikarjuna Pattana Sahakari Bank. Considering their poor liquidity position, the Reserve Bank has prohibited these three banks from conducting any banking activity.
In a statement, RBI has said that depositors of Nashik Zilla Girna Sahakari Bank and Sri Mallikarjuna Pattana Sahakari Bank will not be allowed to withdraw any money from their savings, current, or any other account. They will however be allowed to set off loans against deposits. While 99.87 percent of all the depositors of Nashik Zilla Girna Sahakari Bank are fully covered by the DICGC insurance scheme, close to 99.5 percent of depositors of Sri Mallikarjuna Pattana Sahakari Bank are covered by the scheme.
However, the apex bank has allowed the depositors of Raigad Sahakari Bank to withdraw a sum not exceeding fifteen thousand rupees out of the total balance across all savings or current accounts or any other account.
According to the RBI notification, all these banks will not be able to grant or renew any loans and advances, make any investment, borrow funds or accept fresh deposits, disburse any payment, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI.
RBI has said these directions will remain in force for a period of six months from today and are subject to review. RBI has further clarified that these directions do not mean that the banks’ licenses are being cancelled, adding that modifications in these directions will be considered as soon as the banks’ financial position improves.
