Reserve Bank of India sets restrictions on Bengaluru based national co-operative bank
RBI) has imposed limitations on The National Cooperative Bank, one of Bengaluru's oldest institutions, due to its deteriorating financial status. The bank can now only pay depositors ₹50,000 across all accounts. 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 ₹50,000 to depositors in all sorts of accounts. 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 ₹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 ₹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.
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