The Reserve Bank of India (RBI) has imposed cash withdrawal limits for a bank's account holders in Bengaluru, Karnataka.
RBI has given such directions to the bank Sri Gururaghavendra Sahakara Bank Niyamitha (SGRSBN) whereby, from the close of business on 10 January 2020, the bank will not be able to grant or renew any loans and advances, making any transactions, incur any debt, including borrowing funds and taking fresh deposits.
The bank has also been prohibited from disbursing any contract, whether in fulfillment of its duties and commitments or otherwise, entering into any agreement or settlement and selling, transfering or otherwise disposing of any of its property or assets.
In specific, withdrawal of an amount not exceeding Rs 35,000 of the total balance in each savings bank or current account or any other deposit account will be permitted only. The SGRSBN bank's daily cash withdrawal cap is 35,000 rs.
RBI's directives should not be interpreted as canceling RBI's banking license. The bank will continue to engage with limitations on banking business until its financial position improves.According to RBI, the directions will remain in force for a period of six months from the closing of business on 10 January 2020 and will be subject to review. On 2 January 2020, the RBI had issued written instructions to the bank earlier.
Sri Gururaghavendra Sahakara Bank Niyamitha is an urban cooperative bank and the RBI has given guidelines for the exercise of its powers under subparagraph (1) of section 35 A of the Banking Regulation Act, 1949, read in compliance with section 56 of the Banking Regulation Act, 1949.
According to the website of the bank, the interest rate on deposits from ' 1 year to less than 2 years ' was 8% annually and 8.5% annually on deposits from ' 2 years up to 5 years. '
The last time the RBI issued directions was for the Punjab and Maharashtra Cooperative (PMC) Bank Limited, Mumbai, Maharashtra when the cash withdrawals for the account holders were restricted.
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