In a significant development, the Reserve Bank of India (RBI) has imposed a withdrawal cap of Rs 1,000 on customers of Deccan Urban Cooperative Bank and has ordered the Karnataka-based lender from granting fresh loans or accepting deposits.
The RBI said in a statement that Deccan Urban Cooperative Bank cannot undertake any fresh business, adding the directions will remain in force for six months. The RBI’s directions will come into effect from the close of business on February 19 and are subject to review. “Considering the bank’s present liquidity position, a sum not exceeding Rs 1,000 only of the total balance across all savings bank or current accounts or any other account of a depositor may be allowed to be withdrawn,” the RBI said in a statement late on Friday.
According to RBI, the directions were issued to bank’s chief executive officer. The central bank, however, noted that 99.58% of the depositors of Deccan Urban Cooperative Bank are fully covered by the…