RBI has issued certain Directions to Vijayapur based Deccan Urban Co-operative Bank, Karnataka. The UCB has been restrained from carrying several activities from the close of business on February 19, 2021.
The UCB cannot without prior approval of RBI in writing grant or renew any loans and advances or make any investment, among others.
Considering the bank’s present liquidity position, a sum not exceeding Rs 1000/- (Rs. One thousand only) of the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn, but are allowed to set off loans against deposits subject to the conditions stated in the above RBI Directions. However, 99.58% of the depositors are fully covered by the DICGC insurance scheme.
The issue of the above Directions by the RBI should not per se be construed as cancellation of banking license by RBI. The bank will continue to undertake banking business with restrictions till its financial position improves. The Reserve Bank may consider modifications of these Directions depending upon circumstances, says RBI release.
These Directions shall remain in force for a period of six months from the close of business on February 19, 2021 and are subject to review.