The Reserve Bank of India (RBI) has taken a big decision keeping in mind the interest of the customers. RBI has imposed many restrictions on Mogavira Cooperative Bank after seeing the deterioration in its financial condition. This is not the first time that RBI has imposed restrictions on an associate bank. Earlier, the license of an associate bank was cancelled in May.
Why action on Mogavira Cooperative Bank?
A six-month restriction has been imposed on the bank with several conditions. The Reserve Bank of India (RBI) has taken this decision based on the financial health of the bank. According to the restrictions imposed on Mogavira Cooperative Bank, the maximum withdrawal limit for account holders has been fixed at Rs 1 lakh. This restriction has been implemented after the closure of transactions on June 12, which will continue for a period of 6 months. Then it will be reviewed from time to time.
What can the bank do?
The RBI said, “The cooperative bank cannot grant or renew any loan or make any advance, make any investment and incur any liability including borrowing money and accepting fresh deposits. A depositor is allowed to withdraw a maximum of Rs 1 lakh from his savings account, current or any other account.” The RBI said it will continue to interact with the board and senior management of the bank to improve its performance. The RBI further stated that the issuance of these guidelines was necessary due to the lack of concrete measures to address concerns related to financial stress on the bank and to protect the interests of its depositors. By issuing these guidelines, it is not correct to understand that the RBI has cancelled the banking license.
