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The Reserve Bank of India (RBI) has issued directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 to Shree Mahalaxmi Mercantile Co-operative Bank Ltd., Dabhoi, effective from the close of business on March 3, 2023.
As per the RBI directive (Ref. No. AMD.DOS.SSM.No.S1561/11-03-203/2022-2023), the bank is restricted from granting or renewing loans and advances, making investments, incurring liabilities, accepting fresh deposits, disbursing payments, entering into compromises or arrangements, and selling or transferring assets, without prior written approval from the RBI.
However, depositors will be allowed to withdraw up to ₹30,000 from their total balance across all accounts, subject to conditions specified in the RBI directions.
Eligible depositors can also claim deposit insurance up to ₹5,00,000 through the Deposit Insurance and Credit Guarantee Corporation (DICGC) under Section 18A of the DICGC Act, 2021. For more information, depositors may contact their bank officials or visit the DICGC website: www.dicgc.org.in
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RBI clarified that the issuance of these directions should not be interpreted as cancellation of the bank’s license. The bank will continue its operations under these restrictions for six months, subject to review, and the RBI may modify the directions depending on the financial position of the bank.
[RBI]