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RBI caps deposit withdrawal from ailing National Co-operative Bank
July 25, 2023
The Reserve Bank of India (RBI) on July 24 imposed business restrictions on Bengaluru-based The National Co-operative Bank Ltd and capped deposit withdrawal at ₹50,000 per account. The action, it is learned, was triggered by the weak financial position of the bank.
Subsequently, the bank is not allowed to issue fresh loans or accept fresh deposits without prior approval from the central bank, the RBI said in a statement.
Depositors will be entitled to receive deposit insurance claim amount up to ₹5 lahks from the Deposit Insurance and Credit Guarantee Corporation, the RBI said.
The imposition of business restrictions, however, does not amount to the cancellation of banking license, the regulator mentioned. The bank will continue to undertake banking business with restrictions till its financial position improves, the RBI said.
The Reserve Bank may consider modifications of these directions depending upon circumstances. The business restrictions have been imposed for a period of six months from the close of business on July 24, 2023 and are subject to review, the RBI added.
In May, the RBI imposed a monetary penalty on the National Co-operative bank citing certain rule violations.
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