The Reserve Bank of India (RBI) said on Tuesday depositors would not be able to withdraw funds from their accounts in Karnataka-based Sri Mallikarjuna Pattana Sahakari Bank Niyamita and Maharashtra-based Nashik Zilla Girna Sahakari Bank.
The restrictions on the cooperative banks will remain in force for six months, as per two statements issued by the central bank. The restrictions have been imposed on the due to deteriorating financial positions.
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Coming to Nashik Zilla Girna Sahakari Bank, the RBI said 99.87 percent of the depositors are fully covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance scheme.
Also, 99.53 percent of the depositors of Sri Mallikarjuna Pattana Sahakari Bank Niyamitaare are fully covered by the DICGC insurance scheme.
“Considering the bank’s present liquidity position, no amount from the total balance across all savings bank or current accounts or any other account of a depositor may be allowed to be withdrawn, but are allowed to set off loans against deposits…,” the RBI said in regards to the Karnataka-based bank.
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A similar condition has been imposed on the Maharashtra-based lender.
In the wake of the restrictions, the two banks cannot, without prior approval of the RBI, grant or renew any loans, make any investment, or incur any liability, including borrowing of funds and acceptance of fresh deposits.
In both cases, the RBI said the issue of the directions under the Banking Regulation Act should not per se be construed as a cancellation of banking licenses issued to them.
The two banks woukd continue to undertake banking business with restrictions till their financial position improves, the RBI added.
