RBI imposed Restrictions and Withdrawal Limit of Rs.50,000 on Cooperative Bank

The Reserve Bank of India (RBI) has imposed several restrictions on Ahmedabad-based Colour Merchants Co-operative Bank, including a withdrawal limit of Rs 50,000 per customer, in response to the lender’s deteriorating financial situation.

The restrictions, in the form of ‘directions,’ went into effect on September 25, 2023, according to a statement from the central bank. The restrictions are in effect for six months.

According to the instructions, the bank cannot grant or renew loans, make investments, incur liabilities, or accept new deposits without prior approval from the RBI.

”In particular, a sum not exceeding Rs 50,000 of a depositor’s total balance across all savings bank or current accounts, or any other account, may be withdrawn”, RBI stated.

It also stated that eligible depositors would be entitled to Deposit Insurance and Credit Guarantee Corporation (DICGC) deposit insurance claim amounts of up to Rs 5 lakh.

Depositors can get more information from their banks, according to the RBI. It also stated that the issuance of the directions should not be interpreted as the cancellation of a banking licence by the RBI.

”Until its financial position improves, the bank will continue to conduct banking business with restrictions,” it said.

The Reserve Bank also stated that depending on the circumstances, it may consider changing the directions.