The Reserve Bank of India (RBI) has announced a series of measures on Monday to address the financial challenges faced by Shirpur Merchants’ Co-operative Bank, headquartered in Maharashtra.
Effective immediately, the RBI has placed restrictions on various operations of the bank due to its declining financial health. These measures include halting the granting or renewal of loans and advances, making investments, incurring liabilities, or disposing of assets without prior written approval from the RBI.
In light of the bank’s liquidity concerns, the RBI has prohibited the withdrawal of funds from savings, current, or any other accounts held by depositors. However, depositors are allowed to offset their loans against deposits under certain conditions outlined in the RBI’s directives.
Depositors deemed eligible will be entitled to claim up to Rs 5 lakh in deposit insurance from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
These restrictions on Shirpur Merchants’ Co-operative Bank will remain in effect for a period of six months, starting from the close of business on April 8, 2024. It’s important to note that these directives from the RBI do not signify the cancellation of the bank’s banking license. The bank will continue its banking activities with restrictions until its financial situation improves, as stated by the RBI.
The RBI also noted that it reserves the right to review and modify these directives based on evolving circumstances.
