The co-operative banking sector has come under a cloud again after the Reserve Bank of India (RBI) Friday stopped Bengaluru-based Sri Guru Raghavendra Sahakara Bank from doing business with immediate effect for alleged irregularities in transactions.
Worried customers rushed to the bank’s branches to withdraw their funds. However, according to the RBI, customers can withdraw only Rs 35,000 of the total balance in every savings bank or current account or any other deposit account.
Customers were able to withdraw only Rs 35,000 irrespective of their deposits. The RBI curbs on Sri Guru Raghavendra Sahakara Bank unnerved depositors as the co-operative banking sector is yet to recover from the collapse of Punjab and Maharashtra Co-operative Bank in Mumbai recently.
“The bank shall not, without prior approval of the 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,” the RBI said in a directive to the bank.
The RBI said the co-operative bank should not enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets.
The central bank said the curbs should not be construed as cancellation of banking license by RBI. Sri Guru Raghavendra Sahakara Bank will continue to undertake banking business with restrictions till its financial position improves. These curbs will remain in force for a period of six months from January 10, 2020.
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