The Reserve Bank of India (RBI) has taken decisive action against two struggling banks, Sarvodaya Co-operative Bank based in Mumbai and National Urban Co-operative Bank Limited in Pratapgarh, Uttar Pradesh.
In response to their deteriorating financial health, the RBI has imposed stringent measures, including limiting customer withdrawals from their accounts.
Withdrawal Restrictions Imposed: Know the Limits
Customers of Sarvodaya Co-operative Bank in Mumbai are now restricted to withdraw only up to Rs 15,000, while those banking with National Urban Co-operative Bank Limited in Pratapgarh, Uttar Pradesh, can withdraw up to Rs 10,000.
Additionally, both banks are barred from granting or renewing any loans or advances without prior approval from the RBI.
Temporary Ban and Deposit Insurance Coverage
These restrictions, effective immediately, are slated to remain in force for six months, starting from April 15, 2024.
However, the RBI assures depositors that the banks’ licenses have not been revoked, and eligible depositors are entitled to claim up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC) in case of insolvency.
Recent Regulatory Actions Reflect Systemic Concerns
This latest move follows similar actions taken by the RBI against Shirpur Merchants Cooperative Bank of Maharashtra last week, further underscoring the central bank’s vigilance amid concerns over the financial stability of co-operative banks.
As the situation evolves, the RBI will continue to monitor and review these measures to ensure the safety of depositors and the stability of the banking sector.
