Mumbai: The RBI has imposed several restrictions on Loknete RD (Appa) Kshirsagar Sahakari Bank, including a prohibition on withdrawals, due to material supervisory concerns emanating from developments
in the bank based in Nashik district. Eligible depositors would be entitled to receive a deposit insurance claim up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC), the Reserve Bank said in a statement on Tuesday.
The restrictions or 'directions' on the lender came into effect from the close of business hours on Tuesday. Without RBI prior approval, the bank cannot grant or renew any loans and advances, make any investment, incur any liability, or disburse any payment, among other restrictions.
"Considering the bank's present liquidity position, the bank has been directed not to allow withdrawal of any amount from savings bank or current accounts or any other account of a depositor, but is allowed to set off loans against deposits subject to the conditions stated in the above RBI Directions," the central bank said. The bank may incur expenditure in respect of certain essential items, such as salaries of employees, rent, and electricity bills, it added.
"These Directions are necessitated due to material supervisory concerns emanating from developments in the bank, and to protect the interests of depositors of the bank," it noted. The restrictions will remain in force for a period of six months from the close of business on December 16, 2025, and are subject to review, the RBI said. It further said the issue of the directions should not per se be construed as cancellation of the banking license.
The bank will continue to undertake banking business, subject to the restrictions, till its financial position improves. The RBI said it will continue to monitor the position of the bank and take necessary actions, including modifications of the directions, as warranted, depending upon circumstances and in the interest of the depositors.
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