The Reserve Bank of India (RBI) has taken strict action against Loknete RD (Appa) Kshirsagar Co-operative Bank in Nashik, Maharashtra, and Guwahati Cooperative Urban Bank in Assam due to serious financial and supervisory concerns.
As a result, withdrawals by depositors have been restricted, and other banking operations are limited.
These measures are effective from the close of business on Tuesday and will remain in force for six months.
What Restrictions Have Been Imposed?
For Loknete RD (Appa) Kshirsagar Co-operative Bank, the RBI has directed that:
Depositors cannot withdraw funds without permission.
The bank cannot grant new loans or renew existing ones.
No new investments, liabilities, or payments can be made.
Similarly, for Guwahati Cooperative Urban Bank, the RBI has imposed a withdrawal limit of ₹35,000 per depositor due to the bank’s deteriorating financial condition.
These steps are aimed at preventing further deterioration of the banks’ financial health and protecting depositors.
Depositors Are Protected
The RBI has clarified that eligible depositors will receive deposit insurance coverage up to ₹5 lakh under the Deposit Insurance and Credit Guarantee Corporation (DICGC).
This ensures that depositors’ money is protected despite the restrictions.
The RBI has also appealed to depositors to remain calm and avoid panic, emphasizing that these measures are temporary and meant to stabilize the banks.
Why Did RBI Take These Steps?
The actions were taken because:
Both banks were showing signs of financial weakness.
Previous discussions with bank management did not result in adequate measures to strengthen operations.
The withdrawal limit and restrictions help manage liquidity and safeguard depositors’ interests.
During this period, the RBI will continue to monitor the banks closely and ensure that depositors are protected.