Withdrawals at Deccan Urban Co-op Bank capped at Rs 1000 by RBI for six months

Banking

The regulator also mentioned that the officials at the bank cannot sanction loans or advances or make fresh investments without prior approval from the RBI.

TNM Staff

The Reserve Bank of India (RBI) has placed restrictions on the Karnataka-based Deccan Urban Co-operative Bank and capped its withdrawals at Rs 1,000 per customer across all savings or current bank accounts in the bank. Customers are, however, allowed to set off loans against deposits. The RBI communicated its decision in a press release. "Considering the bank's present liquidity position,a sum not exceeding ₹1000/- (Rs. One thousand only) of  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 all  savings  bank  or  current  accounts  or  any  other  account  of  a  depositor,  may  be  allowed  to  be  withdrawn,  but  are  allowed  to  set  off  loans  against  deposits  subject  to  the  conditions  stated in  the  above  RBI  Directions," the press release issued on Friday said.  It said customers can set off their loans against deposits subject to conditions. "However, 99.58% of the depositors are fully covered by the Deposit Insurance and Credit Guarantee Corporation insurance scheme," the regulator said in the press release. It also mentioned that the officials at the bank cannot sanction loans or advances or make fresh investments without prior approval from the RBI.  "The Chief  Executive  Officer  of  the  aforesaid  bank  shall  not,  without  prior  approval  of  RBI  in  writing  grant  or  renew  any  loans  and  advances,  make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, 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 Direction dated February 18, 2021 a copy of which is displayed on the  bank's  premises  for  perusal  by  interested  members  of  the  public," read the release. The decisions by the RBI are set to remain in effect for six months from February 19. They are subject to a review, the release added. The bank will continue with business with the restrictions in place until its financial condition improves. 

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