INVC NEWS
New Delhi : With an aim to protect the interests of depositors and stabilize the financial sector, the Reserve Bank of India (RBI) has imposed significant restrictions on two major banks in Mumbai and Uttar Pradesh. These restrictions have been imposed under Section 35A of the Banking Regulation Act, 1949, which empowers the RBI to intervene in the operations of banks facing financial crisis. These instructions will come into effect immediately after close of business on Monday, April 15, 2024.
##Restrictions imposed by RBI
### National Urban Co-operative Bank Limited, Pratapgarh (Uttar Pradesh)
RBI has imposed strict restrictions on National Urban Co-operative Bank Limited located in Pratapgarh, Uttar Pradesh due to its deteriorating financial condition. With immediate effect, customers of this bank will face a withdrawal limit of Rs 10,000**. The purpose of this restriction is to restrain the bank and ensure orderly functioning of financial transactions.
### Sarvodaya Sahakari Bank, Mumbai
Similarly, the RBI has taken action against Mumbai-based Sarvodaya Cooperative Bank, recognizing the challenges posed by its weak financial position. Now a withdrawal limit of Rs 15,000 will be applicable on the customers of this bank. These measures are important to restore stability and maintain depositor confidence amid economic uncertainty.
## Deposit Insurance and Credit Guarantee Corporation (DICGC)
Under these circumstances, depositors are assured of the protection provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC). Depositors will be entitled to receive **deposit insurance claim** for amounts up to **Rs 5 lakh**. This safety net acts as an important assurance to individuals and businesses who entrust their money to these banks.
##Operational Limitations
The RBI directions cover various operational aspects of the affected banks. Specifically, banks are prohibited from making or renewing any **loans and advances**, making investments, incurring liabilities or distributing payments without the prior approval of the RBI. This comprehensive approach is aimed at streamlining operations and preventing further financial stress.
## Withdrawal Restrictions
### National Urban Co-operative Bank Limited, Pratapgarh (Uttar Pradesh)
For National Urban Co-operative Bank Limited customers, withdrawals exceeding Rs 10,000** from savings, current or any other account will be subject to RBI approval. The Central Bank may impose conditions on such withdrawals to ensure the orderly functioning of the bank and to protect the interests of depositors.
### Sarvodaya Sahakari Bank, Mumbai
Similarly, customers of Sarvodaya Sahakari Bank in Mumbai will face restrictions on withdrawal of amounts above **Rs 15,000**. These measures have been implemented to manage liquidity and prevent excessive outflows that could increase banks’ financial challenges.
