City Co-Operative Bank Operations Restricted by RBI! From Withdrawal Limit to Loan Applications-Know What it Means for Mumbai Bank Customers

Mumbai, April 19: The Reserve Bank of India (RBI) on Wednesday placed restrictions on the banking operations of City Co-operative Bank Ltd in Mumbai until the time the bank’s financial position improves.  It must be noted that such directions by the RBI are issued when the financial condition of a bank is precarious.

The operations which have been hampered after the RBI directive include issuance of loans, advances, making investments or accept any fresh deposits. The bank said its NPAs stood at 8.9% and had a capital adequacy ratio of 10.16% in March 2016.

“The issue of the directions by the Reserve Bank should not, per se, be construed as cancellation of banking licence by the RBI. The bank will continue to undertake banking business with restrictions till its financial position improves," the RBI said in a statement. The RBI said that the current directions by the central bank, however, do not in any way mean that the bank's licence has been cancelled.

Here’s all you need to know:

1. The RBI has restricted the bank from granting loans, making investments, creating fresh liabilities or dealing with its assets in any way.
2. The RBI said that customers of the cooperative bank will not be allowed to withdraw more than Rs1,000 of the total balance held in savings or current accounts or any other deposit account.
3. These directions are effective from the close of business on 17 April, 2018.
4. Also, the bank will have to take prior approval from the RBI before it can disburse loans, make any investment, borrow funds or accept fresh deposits.
5. The directions by the RBI have been issued under Section 35A of the Banking Regulation Act, 1949 (applicable to co-operative societies) and Section 56 of the Banking Regulation Act, 1949.
6. The bank said its NPAs stood at 8.9% and had a capital adequacy ratio of 10.16% in March 2016.

The Reserve Bank of India (RBI) has placed restrictions on the City Co-operative Bank and limited withdrawals to Rs 1,000 per account. The bank has also been barred from granting loans, making investments, creating fresh liabilities or dealing with its assets in any way. The directions, issued under Section 35A of the Banking Regulation Act, 1949 (applicable to co-operative societies) and Section 56 of the Banking Regulation Act, 1949, will be applicable from April 17. The central bank has indicated poor "financial position" as a reason for these directions, which it said may change in future

In a directive issued to the bank, the regulator said that the customers of the cooperative bank will not be allowed to withdraw more than Rs1,000 of the total balance held in savings or current accounts or any other deposit account. The bank will also have to take prior approval from the RBI before it can disburse loans, make any investment, borrow funds or accept fresh deposits.

The City Co-operative Bank Ltd is headed by Shiv Sena MP Anandrao Adsul. The Bank has 10 branches in Mumbai and had a share capital and reserves of Rs 55 crore as of March 2016.  According to a report by TOI, the bank deposit base was Rs 534 crore and it had advances of Rs 362 crore as on March 2016. The bank said its NPAs stood at 8.9% and had a capital adequacy ratio of 10.16% in March 2016.

(The above story first appeared on LatestLY on Apr 19, 2018 10:48 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).