RBI imposes restrictions on Shirpur Coop Bank amid financial downturn

The Reserve Bank of India (RBI) has taken decisive action against the Shirpur Merchants' Co-operative Bank, based in Maharashtra, imposing a series of restrictions due to the bank's deteriorating financial health.

Effective immediately, the RBI has barred the Shirpur Coop Bank from granting or renewing any loans and advances, making investments, incurring liabilities, or disposing of assets without prior written approval from the central bank.

Furthermore, customers of the bank will face restrictions on withdrawals, with no withdrawals permitted from savings, current, or any other depositor accounts. However, the RBI has allowed for the setting off of loans against deposits under specific conditions outlined in its directions.

In light of the situation, depositors are assured of protection up to Rs 5 lakh through the Deposit Insurance and Credit Guarantee Corporation (DICGC).

These measures will be enforced for a period of six months starting from the close of business on April 8, 2024. The RBI clarified that these actions do not signify the cancellation of the bank's banking license, as it will continue to operate under restrictions until its financial position improves.

The central bank reserves the right to modify these directives depending on the evolving circumstances surrounding the Shirpur Coop Bank's financial condition.

(With PTI inputs)