RBI imposes restrictions on Shirpur Coop Bank amid financial downturn

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

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

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

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

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

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

(With PTI inputs)