RBI Restricts Baghat Urban Co-op Bank, Solan

Mumbai, Oct 8 (PTI) The Reserve Bank has imposed several restrictions on Solan-based The Baghat Urban Co-operative Bank, including a Rs 10,000 cap on withdrawal per customer.

In the recent past, the central bank has engaged with the Board and senior management of the bank for improvement in its functioning, the Reserve Bank of India said in a statement.

However, the lack of concrete efforts taken by the bank to address the supervisory concerns and to protect the interests of depositors of the bank necessitated the issuance of the directions.

With restrictions in place, The Baghat Urban Co-operative Bank cannot, without prior approval of the RBI in writing, grant or renew any loans and advances, and incur any liability, including borrowing of funds and acceptance of fresh deposits, among others.

"Considering the bank's current liquidity position, the bank has been directed to permit withdrawal of a sum not exceeding Rs 10,000 of the total balance held in savings bank or current accounts or any other account of a depositor, but is allowed to set off loans against deposits...," the RBI said.

The eligible depositors would be entitled to receive a deposit insurance claim amount of their deposits up to a monetary ceiling of Rs 5 lakh only in the same capacity and in the same right, from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

The issue of the directions should not per se be construed as cancellation of the banking license by the RBI, the central bank said.

The bank will continue to undertake banking business, subject to restrictions, till its financial position improves.

The RBI further said it continues to monitor the position of the bank and will take necessary actions, including modifications of the directions, as warranted, depending upon circumstances and in the interest of the depositors.

The directions shall remain in force for a period of six months from the close of business on October 8, 2025 and are subject to review.