RBI Actions on Baghat Urban Co-Operative Bank: Taking regulatory action, the Reserve Bank of India (RBI) has imposed strict restrictions on The Baghat Urban Co-operative Bank Limited, based in Solan, Himachal Pradesh. According to the instructions of the Central Bank, now this bank will neither be able to accept any new deposits nor will be able to issue new loans. Along with this, payment of bank liabilities has also been banned.
What are the instructions of RBI?
RBI said that without prior written permission the bank cannot give any new loan, accept new deposits nor fulfill its financial obligations. This step has been taken after serious financial irregularities came to light during the recent inspection.
According to the report of news agency PTI, considering the current cash position of the bank, RBI has set the withdrawal limit of customers at Rs 10,000. However, RBI has given the relaxation that the bank can use the amount present in the customers’ accounts to adjust their outstanding loans.
What will happen to insurance coverage?
RBI also clarified that the bank’s depositors have insurance protection under the Deposit Insurance and Credit Guarantee Corporation (DICGC). According to this provision, each depositor will get an insured amount up to a maximum of ₹ 5 lakh, which will be decided as per the status and rights of his account.
The central bank also clarified that these restrictions do not amount to canceling the bank’s license. The bank will be able to continue its operations with limited conditions. This step of RBI has been taken with the aim of stabilizing the financial condition of the bank and protecting the interests of depositors.
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