RBI Restricts Shirpur Coop Bank: Withdrawal Curbs, Financial Woes

Mumbai, Apr 8 (PTI) The Reserve Bank of India (RBI) on Monday imposed several restrictions on Maharashtra-based Shirpur Merchants' Co-operative Bank, including withdrawal of funds by customers, in the wake of the lender's deteriorating financial position.

In a statement, the RBI said from the close of business on Monday, the bank will not grant or renew any loans and advances, make any investment, incur any liability, transfer or otherwise dispose of any of its properties or assets, without prior approval of the central bank in writing.

"Considering the bank's present liquidity position, no amount from the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn, but are allowed to set off loans against deposits subject to the conditions stated in the above RBI directions," the central bank said.

The RBI further said the eligible depositors would be entitled to receive deposit insurance claim amount of his/her deposits up Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

The restrictions on The Shirpur Merchants' Co-operative Bank will remain in force for six months from the close of business on April 8, 2024, the RBI said.

The directions by the RBI should not per se be construed as cancellation of banking licence, it said.

"The bank will continue to undertake banking business with restrictions till its financial position improves," it said.

The Reserve Bank may also consider modifications of the directions depending upon circumstances, the central bank added.