Summary of this article
RBI has extended curbs on Konark Urban Co-operative Bank for another three months
The restrictions have been extended till April 23, and is subject to review
The Reserve Bank of India (RBI) has extended curbs on Maharashtra-based Konark Urban Co-operative Bank. The ongoing restrictions on the co-operative bank will be extended for another three months, the RBI said.
The RBI had imposed several restrictions on the bank in April 2024, due to the bank’s deteriorating financial conditions. The restrictions were made in the form of directions under Section 35A (1) of the Banking Regulations Act, 1949, along with Section 56 of the Act, RBI said. Accordingly, the directive was extended further for three months from close of business on January 23, to close of business on April 23, and is subject to review, it said.
“The aforesaid extension and /or modification by the Reserve Bank of India should not per se be construed to imply that the Reserve Bank of India is satisfied with the financial position of the bank,” RBI said.
What are the restrictions imposed on the bank?
Under the restrictions imposed, the bank has been restricted from carrying out several business operations until the position of the bank improves financially. This includes restrictions on the bank to grant or renew any loans and advances. Additionally, the RBI also curbed the bank from making any new investments or taking on any liability transfer during this time. The bank also cannot dispose of any of its properties without the permission of the RBI.
The RBI had further said that due to the liquidity position of the bank, depositors of the bank were not allowed to withdraw any amount from their account or from the total balance across all current or savings accounts. However, the bank was allowed to set off loans during this time.
What can Depositors do in this Situation?
Depositors who had Rs. 5 lakh or more in their savings or current accounts of the bank will be eligible to receive a deposit insurance claim from the Deposit Insurance and Credit Guarantee Corporation (DICGC). Under this, eligible depositors can only get back their deposits up to Rs. 5 lakh per person, while the rest of their deposits will only open up once the restrictions on the bank are removed.
