RBI Action on Bank: For the second consecutive day, the Reserve Bank of India (RBI) has cracked down on a cooperative bank, prohibiting its customers from withdrawing cash exceeding ₹10,000. However, the bank’s license has not been revoked.
The Reserve Bank of India has cracked down on another cooperative bank. The RBI has stated that those with accounts in this bank will only be allowed to withdraw ₹10,000. Previously, the RBI had cracked down on the Jijabai Cooperative Bank in Maharashtra, barring its customers from making any deposits or withdrawals. This time, the RBI has cracked down on a cooperative bank in Himachal Pradesh.
The RBI has imposed several restrictions on The Baghat Urban Co-operative Bank, located in Solan, Himachal Pradesh, including a ₹10,000 withdrawal limit per customer. The RBI stated that the central bank had recently held discussions with the bank’s board and senior management to improve its operations. However, the bank has not made concrete efforts to address supervisory concerns and protect the interests of depositors, necessitating the issuance of these directives.
Loan disbursements are also prohibited.
Under these RBI restrictions, The Baghat Urban Co-operative Bank cannot grant any new loans or advances, nor incur any liability, such as borrowing or accepting new deposits, without the prior written permission of the RBI. The RBI has stated that, considering the bank’s current liquidity position, depositors will be permitted to withdraw a maximum of Rs 10,000 from their savings, current, or any other account. However, the bank is permitted to set off customer deposits against their loans.
How much money will customers be entitled to?
According to the RBI, eligible depositors will be entitled to receive a maximum insurance cover of ₹5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC). This amount will be disbursed based on the account and rights in which the deposit was made. Regardless of the amount deposited, customers will only be eligible to claim up to ₹5 lakh under this guarantee. This includes all types of deposits, including FDs, RDs, and savings accounts.
The RBI clarified that these directives should not be construed as a cancellation of the bank’s license
The bank will continue its banking operations with certain restrictions until its financial position improves. The central bank also stated that it is continuously monitoring the bank’s situation and will take necessary action, including modifications to the directives, if required, based on the circumstances and the interests of depositors. These directives will be effective from the close of business on October 8, 2025, and will remain in effect for a further six months, subject to periodic review.
