The Reserve Bank of India (RBI) has taken strict action against Mumbai-based Mogaveera Cooperative Bank, citing regulatory concerns and its weakening financial condition. The central bank has imposed several restrictions on the bank for a period of six months. The directives came into effect from the close of business on Friday and will remain in force during the restriction period.

Customers Face Withdrawal Limits

The RBI’s action will directly affect the bank’s depositors. Under the new rules, customers can withdraw a maximum of Rs 1 lakh from their savings, current, or any other account. Withdrawals above Rs 1 lakh have been restricted. However, customers who have taken loans from the bank will still be allowed to continue paying their EMIs.

Ban on New Loans and Investments

During the six-month restriction period, the bank will face several operational limitations. The bank will not be allowed to issue new loans or advances to customers. It will also be barred from renewing existing loans.

In addition, the bank cannot make new investments, take on fresh liabilities, or borrow funds from the market. The RBI has also prohibited the bank from accepting new fixed deposits (FDs) or any other fresh deposits.

RBI Says Bank’s Licence Has Not Been Cancelled

The central bank clarified that these restrictions should not be viewed as a cancellation of the bank’s licence. According to the RBI, it is in regular contact with the bank’s board and senior management to improve its financial health and liquidity position.

Restrictions Aimed at Protecting Depositors

The RBI said the measures have been introduced to safeguard depositors’ interests and address the bank’s financial concerns. The bank will continue its banking operations under these restrictions until its financial position improves and the central bank issues further directions.