The Reserve Bank of India (RBI) has recently taken a tough stand against three major banks. Strict restrictions have been imposed on these banks under Sections 35A and 56 of the Banking Regulation Act 1949. These three banks have been ordered to stop their operations from July 4. During this time, customers will also have to face a lot of trouble. Customers of two banks included in this list will be able to withdraw only a limited amount, while customers of one bank have not even been allowed to withdraw money. Let us know what the whole matter is and what effect it will have on the customers.
Which banks have been banned and for how long
This order of the RBI will remain in force for the next 6 months. It is important to know here that the RBI has not canceled the license of these banks, but has imposed restrictions on them for some time. During this time, the status of the banks will be reviewed. The central bank will also issue necessary instructions for improvement. If the situation improves, a decision can also be taken to remove these restrictions.
List of banned banks:
Innovative Co-operative Urban Bank Limited, Delhi
The Industrial Co-operative Bank Limited, Guwahati
The Sahakari Bank Limited, Mumbai
Which services will be closed
These three banks will not be allowed to approve or renew any kind of loan or advance without the permission of the RBI. Apart from this, they have also been barred from any investment, lending, and other transactions, including accepting any new deposits.
These services will remain closed:
New loans will not be available, and old ones will not be renewed.
The bank will not be able to make any new investments or borrow.
Customers will not be able to deposit new money into their accounts.
The bank will not be able to make any payment to meet its liabilities and responsibilities.
A ban on entering into any new agreement or arrangement.
The bank will not be able to sell any of its assets or properties.
However, permission has been given for some essential expenses like the salary of bank employees, rent, and electricity bills. Apart from this, permission has also been given to reset the loan against deposits.
How much will the customer be able to withdraw
RBI has allowed customers of Innovative Cooperative Urban Bank Limited, Delhi, and The Industrial Cooperative Bank Limited, Guwahati, to withdraw up to ₹ 35,000 from their savings account, current account, or any other account. This is a limited withdrawal, which can help customers a little to meet their immediate needs.
However, customers of Bhavani Sahakari Bank Limited, Mumbai, will not get this facility. This means that the customers of this bank will not be able to withdraw any money from their accounts right now.
Deposit Insurance Claim
Every customer has the right to receive a deposit insurance claim amount of up to ₹5 lakh on their deposits under the provisions of the DICGC Act 1961. It is a safety net that guarantees customers a part of their money back in case the bank fails.
Why did the RBI take this tough step
Recently, the RBI had talks with the board and senior management of the bank to improve the functioning of the bank. This step has been taken because the bank did not make concrete efforts to address monitoring concerns and protect the interests of the bank’s depositors. Instructions have been issued to all three banks on July 3. This is a preventive measure of the RBI, aimed at maintaining stability in the financial system and ensuring the safety of depositors’ money.