The RBI said that depositors should not feel worried as 99.89 per cent of the depositors are fully covered by DICGC insurance scheme.
In a significant development, the Reserve Bank of India (RBI) has put restrictions on withdrawals from Nashik-based Independence Co-operative Bank Limited. The RBI has taken the decision because of the present liquidity position of Independence Co-operative Bank Limited.
The RBI, however, said in a statement that depositors should not feel worried as 99.89 per cent of the depositors are fully covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance scheme.
It is to be noted that as per the insurance scheme, every depositor in a bank is entitled to receive deposit insurance claim amount of his/her deposits up to Rs 5 lakh from the DICGC. The RBI said that the restrictions on Independence Co-operative Bank Limited will remain in force for a period of six months.
"Considering the bank's present liquidity position, no amount from the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn, but are allowed to set off loans against deposits subject to…conditions…," the central bank said.
Besides this, the RBI has also put some other restrictions on Independence Co-operative Bank Limited from the close of business on Wednesday.
As per the restrictions imposed by the RBI, the CEO of the of the bank will not be authorised to grant or renew any loans and advances, make any investment, incur any liability, and disburse any payment, among others without the prior approval of the RBI.
The RBI statement noted that the issue of the directions to Independence Co-operative Bank Limited does not mean that the license of the bank has been cancelled. The RBI added that the lender will continue to undertake banking business with restrictions and the modifications of the directions may be considered by the central bank in the near future depending upon circumstances.
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