RBI in action: Customers will not be able to withdraw more than ₹10,000, RBI cracks down on another bank..

The Reserve Bank of India has cracked down on another cooperative bank. The RBI has stated that those with accounts in this bank will be permitted to withdraw only ₹10,000. Previously, the RBI had also cracked down on the Jijabai Co-operative Bank in Maharashtra, restricting its customers from making any deposits or withdrawals. This time, the RBI has targeted a cooperative bank in Himachal Pradesh.

The RBI has imposed several restrictions on The Baghat Urban Co-operative Bank in Solan, Himachal Pradesh, including a ₹10,000 per customer withdrawal limit. The RBI stated that in recent days, the central bank had discussed with the bank's board and senior management to improve its operations. However, the bank has not made concrete efforts to address supervisory concerns and protect depositors' interests, necessitating the issuance of these directives.

Loan disbursements are also prohibited

Under these RBI restrictions, the Baghat Urban Co-operative Bank cannot grant new loans or advances, nor incur any liability, such as borrowing or accepting new deposits, without the RBI's prior written permission. The RBI stated that, given the bank's current liquidity position, depositors will be permitted to withdraw a maximum of ₹10,000 from their savings, current, or other accounts. However, the bank is permitted to adjust customer deposits against their loans.

How Much Will Customers Be Entitled To?

According to the RBI, eligible depositors will be entitled to a maximum insurance amount of ₹5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC). This amount will be disbursed based on the account and the rights in which the deposit was made. Regardless of the amount deposited with the bank, they will only be eligible to claim up to ₹5 lakh under this guarantee. This includes all types of deposits, including FDs, RDs, and savings accounts.

Bank's license not revoked.
The RBI clarified that these directives should not be construed as a cancellation of the bank's license. The bank will continue its banking operations with certain restrictions until its financial position improves. The central bank also stated that it is continuously monitoring the bank's situation and will take necessary action, including modifications to the directives, if required, based on the circumstances and the interests of depositors. These directives will be effective from the close of business on October 8, 2025, and will remain in effect for the next six months, subject to periodic review.

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