RBI cracks down on Rupee Co-op Bank, depositors to feel the pain

The Reserve Bank of India (RBI) today directed ailing Pune-based Rupee Co-operative Bank not to allow depositors to withdraw more than Rs 1,000 from savings, current or any other deposit account.

"According to the directions, depositors will be allowed to withdraw a sum not exceeding Rs 1,000 of the total balance held in every savings bank or current account or any other deposit account by whatever name called," RBI said in a statement.

The directions have been issued from the close of business on February 22, 2013, it added.

The bank will, without prior approval in writing from the Reserve Bank, also not be able to grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits.

Besides, it won't be allowed to disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets, RBI said.

The RBI, however, clarified that issue of the directions should not be construed as cancellation of banking licence.

"Rather, Rupee Co-operative Bank will continue to undertake banking business but with restrictions till its financial position improves. The Reserve Bank may consider modifications of these directions depending upon circumstances," it said further.

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