RBI Restrict another bank in Karnataka: Customer rush to withdraw money

Hundreds of anxious customers gathered at the branches of The National Cooperative Bank in Bengaluru as soon as they got to hear about the curbs the Reserve Bank of India (RBI) announced Tuesday morning capping cash withdrawal at the bank at Rs 50,000 per account holder. RBI Restrict another bank in Karnataka: Customer rush to withdraw money.

Furthermore, the RBI has barred the bank from renewing loans, making investments, creating liabilities, making payments, or accepting new deposits. In response to its deteriorating financial status, the Reserve Bank of India (RBI) issued a series of limitations on one of Bengaluru’s oldest institutions, The National Cooperative Bank, on Tuesday, enabling it to distribute only up to Rs 50,000 to depositors in all sorts of accounts.

The National Co-operative Bank had total deposits of Rs 1,679 crore and loans of Rs 1,128 crore as of March 31, 2021, according to the most recent annual report available. After that date, no data is available. According to the annual report, the bank’s net non-performing assets were 27.81 percent as of March 31, 2021, with a capital adequacy ratio of 12.12 percent.

The bank has roughly 13 branches spread over Bengaluru. The business limits are in effect for six months, beginning on July 24, 2023, and are subject to review, according to the RBI. On July 24, the Reserve Bank of India (RBI) imposed business limitations on Bengaluru-based The National Co-operative Bank Ltd, as well as a deposit withdrawal limit of Rs 50,000 per account.

The action, it is believed, was prompted by the bank’s terrible financial status. As a result, the bank is not permitted to make new loans or accept new deposits without prior approval from the central bank, according to a statement issued by the RBI. The Deposit Insurance and Credit Guarantee Corporation will pay depositors up to Rs 5 lakh in deposit insurance claims, according to the RBI.

The installation of business limits, however, does not result in the termination of a banking license, according to the regulator. The bank will continue to conduct banking operations with limits until its financial status improves, according to the RBI. Depending on the circumstances, the Reserve Bank may modify these guidelines. The business limits are in effect for six months, beginning on July 24, 2023, and are subject to review, according to the RBI.

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