New Delhi (Anish Yande): Reserve Bank of India has stated that it has barred Deccan Urban Co-operative Bank Ltd from processing transactions. RBI on Friday stated that in view of the bank's current liquidity position, customers of the bank would be able to withdraw a limited amount only.
Reserve Bank of India puts restrictions on Deccan Urban Co-operative Bank:
In a statement on Friday, the RBI has barred the Deccan Urban Co-operative Bank from granting new loans to customers or processing deposits. The bank has been restricted from making new investments or dispensing payments for reducing liabilities or other reasons, without the permission of the RBI.
Customers are allowed to withdraw an amount up to Rs 1,000 from their accounts. The restrictions are in place for six months. In November 2020, the Reserve Bank of India had issued a penalty of Rs 1 lakh on the Karnataka-based bank. The RBI had issued a penalty citing that the bank had violated the directions for issuing loans and advances.
Bank customers covered by DICGC insurance scheme:
Reserve Bank of India stated that 99.58 percent of the depositors are fully covered by the DICGC insurance scheme.
The Deposit Insurance and Credit Guarantee Corporation provides insurance cover on bank deposits. The wholly-owned subsidiary of RBI provides customers with insurance cover of up to Rs 5 lakh on their bank deposits.
The banking regulator has stated that the restrictions imposed on the Deccan Urban Co-operative Bank should not be considered as a cancellation of the banking license. The bank would continue its operations with restrictions in place until the financial performance improves.
Previously, the banking authority had imposed restrictions on Lakshmi Vilas Bank, PMC Bank, and Yes Bank. The withdrawal limit of Lakshmi Vilas Bank was restricted to Rs 25,000 per customer. Meanwhile, the limit of Yes Bank and PMC Bank was capped at Rs 50,000.
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