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South Indian Coop Bank assets frozen
August 09, 2004 17:54 IST
Last Updated: August 09, 2004 19:38 IST
Following a run on deposits, the Reserve Bank of India on Monday placed some restrictions on South Indian Co-operative Bank Ltd on granting fresh loans, renewal of advances and fixed a ceiling of Rs 1,000 on withdrawals from savings or current account.
The bank, based at Matunga in Central Mumbai, has also been prevented from making investments, selling, transfer or otherwise, dispose of any of its properties or assets without its approval in writing, the RBI said in a release in Mumbai.
Under a directive issued under Section 35A of the Banking Regulation Act, the RBI said that withdrawal is allowed for depositors up to a sum not exceeding Rs 1,000 of the total balance in every savings bank or current account or any other deposit account by whatever name called.
Also renewal of existing deposits on maturity in the same name and capacity is permitted and relaxation of Monday's directive would be considered on review, RBI added.
A RBI team reached the bank to inspect the liquidity conditions after depositors made a beeline to the bank branches to withdraw their money.
Bank Chairman Raghavan Sarathy said cumulative withdrawals stood at over Rs 6 crore (Rs 60 million) for the past three days, after depositors feared that the bank was saddled with huge non-performing assets.
Sarathy said the bank has enough liquidity as well as cash with Maharashtra State Co-operative Bank to meet the demand.
The bank has 13 branches in the city and Thane and Raigad districts of Maharashtra.