RBI Imposed Restrictions on Two Co-operative Banks; Check Details Here

The Reserve Bank of India (RBI) has imposed several restrictions on two co-operative banks of Uttar Pradesh including on fund withdrawals in view of their deteriorating financial position.

These banks are Lucknow Urban Co-operative Bank Ltd., Lucknow (U.P.) and Urban Co-operative Bank Limited, Sitapur.

The restrictions imposed under Section 56 of the Banking Regulation Act, 1949 will remain in force for six months.

Lucknow Urban Co-operative Bank’s Restrictions is that the Customers of this bank will not able to withdraw more than Rs.30000. Other restrictions are the bank shall not, without prior approval of RBI in writing grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in the discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI Direction dated July 28, 2022.

Whereas, restrictions on Urban Co-operative Bank Limited, Sitapur is that, the bank shall not, without prior approval of RBI in writing grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in the discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI Direction dated July 27, 2022. Withdrawal limit for Customers of this bank not more than Rs.50000.

The issue of the above Directions by the RBI should not per se be construed as a cancellation of a banking license by RBI. The bank will continue to undertake banking business with restrictions till its financial position improves. The Reserve Bank may consider modifications of these Directions depending upon circumstances.