RBI imposes restrictions on Mumbai-based Sarvodaya Co-op Bank

RBI imposes restrictions on Mumbai-based Sarvodaya Co-op Bank

The RBI on Monday imposed several restrictions on Mumbai-based Sarvodaya Co-operative Bank, including capping withdrawals at Rs 15,000 for customers, in the wake of the bank's deteriorating financial situation.

The eligible depositors will be entitled to receive a deposit insurance claim amount of his/her deposits up to Rs 5 lakh only from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

The restrictions in the form of Directions under Section 35A of the Banking Regulation Act, 1949, on Sarvodaya Co-operative Bank come into force from the close of business on Monday (April 15, 2024).

Now, the bank cannot, without prior approval of RBI, grant or renew any loans and advances, make any investment, incur any liability, or disburse any payment whether in the discharge of its liabilities and obligations. ''In particular, a sum not exceeding Rs 15,000 of the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn,'' the central bank said.

The RBI also said that the issue of Directions should not per se be construed as cancellation of a banking license by the RBI. The bank will continue to undertake banking business with restrictions till its financial position improves. The restrictions will remain in force for six months from the close of business on April 15, 2024, and are subject to review, the RBI said.

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