RBI bars People's Co-operative Bank from granting loans, taking deposits for 6 months

New Delhi: The Reserve Bank of India (RBI) on Thursday, June 12 barred Kanpur-based People’s Co-operative Bank from granting fresh loans and accepting deposits for six months, due to its weak financial position.

The RBI also said that no withdrawal of the amount of a depositor will be allowed from the co-operative bank.

“As from the close of business on June 10, 2020, the Bank shall not, without prior approval of RBI in writing a grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in the discharge of its liabilities and obligations or otherwise,” the RBI said in a release.

The central bank has barred the co-operative bank from selling, transferring, or disposing of any of its properties or assets.

“In particular, no amount of the total balance across all savings bank or current accounts or any other account of a depositor may be allowed to be withdrawn,” the central bank said.

“These directions will remain in force for six months from the close of business on June 10 and are subject to review,” it said.

The central bank, however, clarified that the directions should not be construed as a cancellation of the banking license of the co-operative bank.

“The bank will continue to undertake banking business with restrictions till its financial position improves,” it said.