The Reserve Financial institution on Friday stated it has barred Karnataka-based Deccan City Co-operative Financial institution Ltd from granting contemporary loans or accepting deposits and prospects can not withdraw greater than Rs 1,000 from their financial savings account for a interval of six months. The lender has additionally been requested to not make contemporary investments or incur any legal responsibility with out its prior permission.
The RBI stated it issued the instructions to chief government officer of the financial institution on Thursday (February 18).
It has additionally requested the lender to desist from disbursing any cost whether or not in discharge of its liabilities or in any other case, or eliminate any of its belongings besides as notified within the RBI course.
“Contemplating the financial institution’s current liquidity place, a sum not exceeding Rs 1000 solely of the overall stability throughout all financial savings financial institution or present accounts or every other account of a depositor, could also be allowed to be withdrawn,” RBI stated in a launch on Friday.
It stated prospects can set off their loans towards deposits topic to circumstances.
58 per cent of the depositors are totally lined by the DICGC insurance coverage scheme,” stated the regulator.
The Deposit Insurance coverage and Credit score Assure Company (DICGC), a wholly-owned subsidiary of RBI, supplies insurance coverage cowl on financial institution deposits.
The RBI additional stated placing the financial institution below restrictions shouldn’t be construed as cancellation of its banking license.
The financial institution will proceed to undertake banking enterprise with restrictions until its monetary place improves.
The Reserve Financial institution could contemplate modifications of the instructions relying upon circumstances.
The instructions are set to stay in pressure for six months from the shut of enterprise on February 19, 2021 and are topic to overview, it added.