RBI stated that Co-operative bank cannot, “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 whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets”, except the ones mentioned on 9th June 2020 by RBI.
This is applicable from 10th June, 2020, since the closing of business of the bank and will remain applicable for a period of six months.
The central bank also said that depositors will not be allowed to withdraw from the bank. It said in its release, “In particular, no amount of the total balance across all savings bank or current accounts or any other account of a depositor may be allowed to be withdrawn”.
While RBI has forbidden the bank from transferring, selling or disposing of any of its assets, liabilities or properties, it clarified that this move does not signify cancellation of banking license and that the lender can continue to carry out banking business “with restrictions till its financial position improves.”
The directions were issued under sub section (1) of Section 35 A of the Banking Regulation Act, 1949 read with Section 56 of the Banking Regulation Act, 1949.
