Reserve Bank of India
In response to the declining financial health of the Maharashtra-based Shirpur Merchants’ Co-operative Bank, the Reserve Bank of India (RBI) on Monday placed a number of limitations on the bank, including a ban on customer fund withdrawals.
The RBI stated in a statement that as of Monday at the latest, the bank will not provide or renew any loans and advances, make any investments, take on any liabilities, transfer, or otherwise dispose of any of its properties or assets without first obtaining written permission from the central bank.
“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the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn, but are allowed to set off loans against deposits subject to the conditions stated in the above RBI directions,” the RBI stated.
The RBI went on to state that deposit insurance claim amounts up to Rs 5 lakh would be given to eligible depositors by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
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According to the RBI, the limitations on The Shirpur Merchants’ Co-operative Bank would be in place for six months starting on April 8, 2024, the last day of business.
It stated that the RBI’s instructions should not be interpreted as the suspension of a banking license in and of themselves. “The bank will continue to undertake banking business with restrictions till its financial position improves,” it stated.
Depending on the situation, the Reserve Bank may also think about changing the guidelines, the central bank stated.