The Reserve Bank of India imposed a Rs 5,000 cap on withdrawals by individual customers from Tamil Nadu-based Musiri Urban Co-operative Bank as part of several restrictions slapped on the lender due to its deteriorating financial condition.
The restrictions on the lender will remain in force for six months from the close of business on March 3 and are subject to review, the RBI said in a statement. With curbs in place, the cooperative bank, without approval of the RBI, cannot grant loans, make any investment, and disburse any payment. The lender cannot also dispose of any of its properties, among others.
Meanwhile, the eligible depositors would be entitled to receive deposit insurance claim amounts of his/her deposits up to a monetary ceiling of Rs 5 lakhs in the same capacity and in the same right, from the Deposit Insurance and Credit Guarantee Corporation.
The RBI, however, said the directions should not per se be construed as cancellation of the banking licence. “The bank will continue to undertake banking business with restrictions till its financial position improves,” it said, adding that it may consider modifications of the directions depending upon circumstances.
Further, the central bank also said that it also restricts the bank from entering into any compromise or arrangement and selling, transferring or otherwise disposing of any of its properties or assets except as notified in the RBI Direction.
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