Deccan Urban Co-operative Bank of Karnataka has been banned by the Reserve Bank of India for doing business. After this, the bank can no longer issue any new loan nor accept any new deposits of any kind.
The RBI has imposed restrictions on this cooperative bank due to poor financial condition. The bank will be prohibited from doing business for 6 months from 19 February 2021. RBI clarified that this ban does not mean canceling the license of the bank from anywhere.
Not only this, RBI has also banned the bank from making any new investment or taking any new responsibility without its permission. Also, on February 18, the bank’s CEO was directed not to make any kind of payment even if it was to pay any liability. Simultaneously, the bank cannot also dispose of any asset exempted from RBI.
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The financial condition of the bank is so bad that RBI has allowed all its savings and current account customers to withdraw only Rs 1,000 in 6 months. The central bank has conditionally allowed customers to repay loans against deposits during the six-month freeze period.
The bank can operate banking services with restrictions. Till then, the bank’s financial condition is expected to improve. The bank will then be reviewed.
