Bengaluru: RBI issues fresh guidelines to National Cooperative Bank, caps withdrawal limit to Rs 50,000

The Reserve Bank of India (RBI) has issued directives to the National Co-operative bank Ltd on July 24th, prohibiting it from renewing loans and advances, making new investments, borrowing funds and accepting new deposits without prior approval of the RBI . It has capped deposit withdrawals at Rs 50,000. For insurance claims the cap is set at Rs 500,000. These directives are applicable for a period of 6 months. These however do not amount to a cancellation of the banking license. These regulatory measures have been put in place considering the weakening financial state of the bank. These are subject to modification based on the circumstance upon the discretion of the RBI. 

In May, RBI had imposed a hefty fine on the National Co-operative Bank in view of the bank flouting certain rules. The penalty they were imposing in case of a shortfall in minimum balance was not proportional to the amount of shortfall. Their latest filed annual report was published on March 31st 2021. They had deposits amounting to Rs 1679 crore and loans amounting to Rs 1128 crore. Its non-performing assets were measured to be at 27.81% and its capital adequacy ratio was measured to be at 12.12%.