RBI imposes curbs on Maharashtra-based Konark Urban Co-op Bank

The RBI on Tuesday imposed several restrictions, including on withdrawals, on The Konark Urban Co-operative Bank, Ulhasnagar (Maharashtra), in the wake of the bank's deteriorating financial situation.

The eligible depositors will be entitled to receive a deposit insurance claim amount of his/her deposits up to Rs 5 lakh only from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

The restrictions in the form of Directions under Section 35A of the Banking Regulation Act, 1949, on The Konark Urban Co-operative Bank came into effect from the close of business on April 23, 2024 (Tuesday).

With the restrictions imposed, the bank cannot grant or renew any loans and advances, make any investment, incur any liability transfer or otherwise dispose of any of its properties, among others, without permission from the RBI.

"Considering the bank's present liquidity position, no amount from the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn, but are allowed to set off loans," the Reserve Bank said.

The RBI further said restrictions on the lender should not per se be construed as cancellation of banking license. The bank, it added will continue to undertake banking business with restrictions till its financial position improves.