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After Lakshmi Vilas Bank, RBI imposes withdrawal limit on THIS bank

The RBI, in a release, said it has issued certain directions to Mantha Urban Cooperative Bank, Mantha District Jalna, Maharashtra, from the close of business on November 17, 2020.

India TV Business Desk India TV Business Desk
New Delhi Updated on: November 18, 2020 11:02 IST
After Lakshmi Vilas Bank, RBI imposes restrictions on withdrawal from THIS bank
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After Lakshmi Vilas Bank, RBI imposes restrictions on withdrawal from THIS bank

Reserve Bank of India on Tuesday imposed restrictions on withdrawals from Maharashtra-based Mantha Urban Cooperative Bank for six months. The RBI, in a release, said it has issued certain directions to Mantha Urban Cooperative Bank, Mantha District Jalna, Maharashtra, from the close of business on November 17, 2020.

As per the directions, the bank will not, without prior approval of RBI in writing, grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment, among others.

"In particular, no deposit of the total balance across all savings bank or current account or any other account of a depositor may be allowed to be withdrawn" subject to conditions stated in the directions, the central bank said. The directions will remain in force for a period of six months from the close of business of November 17, 2020, and are subject to review, it added.

It further said the issue of the directions by the RBI should not per se be construed as cancellation of banking license by RBI. The bank will continue to undertake banking business with restrictions till its financial position improves, the central bank said, and added it may consider modifications of the directions depending upon circumstances.

In a separate release, RBI said it has imposed a monetary penalty of Rs 20 lakh on Bengaluru-based Shushruati Souharda Sahakara Bank Niyamita for deficiencies in regulatory compliance. The central bank also imposed a penalty of Rs 1 lakh on The Deccan Urban Co-operative Bank, Vijayapura, Karnataka, for contravention of the directions issued by it on the prohibition of loans and advances to directors.

RBI puts Lakshmi Vilas Bank under moratorium

The government on Tuesday imposed a 30-day moratorium on Lakshmi Vilas Bank, restricting cash withdrawals at Rs 25,000 per depositor, and simultaneously announced a scheme to merge the cash-strapped lender with DBS India. The step was taken on the advice of the Reserve Bank in view of the private sector bank's deteriorating financial health.

The Reserve Bank also superseded the board of Lakshmi Vilas Bank (LVB) and appointed T N Manoharan, former non-executive chairman of Canara Bank, as its administrator for 30 days. The RBI placed in the public domain a draft scheme of amalgamation of LVB with DBS Bank India Ltd (DBIL).

DBS Bank India, in a statement, said the proposed amalgamation will provide stability and better prospects to LVB's depositors, customers and employees.

(With PTI inputs)

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