RBI Lays a 6-Month Ban on People’s Co-operative Bank; The Bank Will No Longer Allow Loans nor Accept Deposits

The Reserve Bank of India (RBI) has imposed a 6-month ban on the People’s Co-operative Bank. The ban has been imposed on the bank due to a weak financial position. Due to this restriction, the bank will no longer be able to take new loans and deposits for the next 6 months. People’s Co-operative Bank is located in Kanpur and Yes Bank is promoted. RBI has said that at present, the depositor of this co-operative bank will not get the facility of withdrawal.

Written permission is required for any kinds of transaction: “Reserve Bank”

The statement issued by the RBI on Thursday said that after the business closed on June 10, 2020, the People’s Co-operative Bank had to renew any new loan or old dues, make any kind of investment and accept new deposits. For this, written permission has to be obtained from the Reserve Bank. RBI has said that the co-operative bank has been barred from selling, transferring, or disposing of any property. The central bank stated that in particular, the total balance in all savings bank or current account or any other account of the depositor cannot be allowed to be withdrawn.

Restrictions will be applicable until the Situation Improves

The Reserve Bank has said that these directives will remain in force for six months after the close of business on June 10 and will be subject to review. However, the Reserve Bank made it clear that this directive should not be taken as a revocation of the banking license of the cooperative bank. The bank will continue to conduct banking business with restrictions until its financial condition improves.

Bank will stop Payment from May 12

The People’s Co-operative Bank had stopped making payments to customers since May 12. The bank had posted a notice at the Aryanagar branch in Kanpur, stating that it was unable to pay due to a lack of cash. The bank had also banned online payment, RTGS, NEFT, etc. After this notice, there is a long line of customers for withdrawal, but they have to return disappointed.

PMC Bank has also Imposed such Restrictions

RBI has also taken similar action on Punjab and Maharashtra Co-operative Bank (PMC Bank). PMC Bank was banned for 6 months on 23 September 2019. This has been extended twice for 3-3 months. Currently, PMC Bank is banned till 22 June 2022.

Promoters of Private Banks will not be able to remain CEO for more than 10 years

The RBI has issued a discussion paper to continue as the bank heads of promoters of private banks. According to this paper, a CEO or whole-time director in a private bank can hold office until the age of 70. At the same time, the promoter or big shareholder can stay in the post of CEO for 10 years. If a CEO or Whole Time Director (WTD) is not a promoter or major shareholder, he can stay in his post for 15 years. The RBI has asked for suggestions on this paper by 15 July.