Three cooperative banks have received harsh limitations from the Reserve Bank of India in the last two days. Along with the Sri Mallikarjuna Pattana Sahakari Bank situated in Karnataka, these banks also include two from Maharashtra: the Nashik Zilla Girna Sahakari Bank Limited and the Raigad Sahakari Bank. The Reserve Bank of India has restricted these three banks from engaging in any banking activity due to their weak liquidity situation.
- The Reserve Bank of India (RBI) announced that depositors of Sri Mallikarjuna Pattana Sahakari Bank and Nashik Zilla Girna Sahakari Bank will not be permitted to withdraw any funds from their savings, current, or other accounts. However, they will be able to offset loans against deposits.
- Nearly 99.5 percent of the depositors of Sri Mallikarjuna Pattana Sahakari Bank are fully insured by the DICGC insurance system, compared to 99.87 percent of the depositors of Nashik Zilla Girna Sahakari Bank.
- However, the top bank has permitted Raigad Sahakari Bank depositors to withdraw a maximum of 15,000 rupees from the balance of all savings, current, and other accounts combined.
- All of these banks are prohibited from making loans and advances, investing money, borrowing money, accepting new deposits, disbursing money, entering into compromises or other agreements, or selling, transferring, or otherwise disposing of any of their properties or assets without first receiving notification from the RBI.
According to RBI, these directives are subject to review and will be in effect for a period of six months. Furthermore, the RBI has stated that these directives do not imply that the banks’ licences are being revoked and that changes to these directives will be taken into account as soon as the banks’ financial situation gets better.