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The Reserve Bank of India (RBI) has issued Directions to Deccan Urban Co-operative Bank (Vijayapur, Karnataka), whereby, as from the close of business on February 19, 2021, deposit withdrawals have been capped at ₹1,000 per depositor.
“Considering the bank's present liquidity position, a sum not exceeding ₹1000 of the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn, but are allowed to set off loans against deposits subject to the conditions stated in the above RBI Directions.
Also read: Banks under Directions: Govt, RBI working on allowing depositors withdraw up to ₹5 lakh
“However, 99.58 per cent of the depositors are fully covered by the DICGC insurance scheme,” the central bank said in a statement.
According to the Directions, the chief executive officer of the bank shall not, without prior approval of RBI in writing grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, among others.
“The issue of the above Directions by the RBI should not per se be construed as cancellation of banking license by RBI.
“The bank will continue to undertake banking business with restrictions till its financial position improves. The Reserve Bank may consider modifications of these Directions depending upon circumstances,” the central bank said.
Besides Deccan Urban Co-operative Bank, RBI has imposed directions on two other urban co-operative banks — Sarjeraodada Naik Shirala Sahakari Bank (Shirala, Sangli District, Maharashtra) with effect from close of business on February 3, and Independence Co-operative Bank (Nashik, Maharashtra) with effect from close of business on February 10 — since the beginning of 2021. .
According to the RBI’s report on Trend and Progress of Banking in India 2019-20 (released on December 29, 2020), since April 1, 2015, 52 UCBs have been placed under All Inclusive Directions by the RBI.
Of the total claims settled by the Deposit Insurance and Credit Guarantee Corporation (DICGC) since inception, around 94.3 per cent of claims pertained to co-operative banks that were liquidated, amalgamated, or restructured.
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