Konark Urban Co-operative Bank: The Reserve Bank of India (RBI) has imposed a number of restrictions on Konark Urban Co-operative Bank, located in Ulhasnagar, Maharashtra, including restrictions on withdrawals of funds.
The bank’s financial situation is said to be poor, and so these restrictions have been placed. However, eligible depositors will still be entitled to a deposit insurance claim amount of up to Rs 5 lakh from their deposits, in accordance with the provisions of the Deposit Insurance and Credit Guarantee Corporation (DICGC).
What Will change?
The restrictions imposed on Konark Urban Co-operative Bank under Section 35A of the Banking Regulation Act, 1949 came into effect at the close of business on April 23, 2024 (Tuesday).
As a result of the restrictions, the bank will not be able to sanction or renew any loans and advances, make any investments, transfer any liabilities, or dispose of any of its assets without the prior approval of the RBI.
What did RBI say?
The bank’s current cash position must be taken into consideration. The depositor must not be allowed to withdraw any amount from any savings account, current account, or any other account. However, the lender may be permitted to withdraw funds to make loan repayments, said RBI. The RBI stated that the lender’s prohibition does not equate to the revocation of its banking license. It said that the bank will continue to conduct its banking operations with restrictions until its financial status improves.
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The Reserve Bank of India keeps an eye on the banks’ financial situation and takes action on that basis. Banks are sometimes subjected to strict restrictions, and their licenses are occasionally revoked. The majority of RBI’s actions have been against cooperative banks.
