The Reserve Bank of India (RBI) has set the customer withdrawal limit for Baghat Urban Co-operative Bank located in Solan district of Himachal Pradesh at Rs 10,000. This means that bank depositors will now be able to withdraw a maximum of Rs 10,000 at a time from their savings or current account. This step has been taken in view of the cash position of the bank so as to protect the interests of the depositors.
The Reserve Bank has imposed some more stringent restrictions on the bank. According to these restrictions, the bank cannot give any new loan, nor accept any advance or new deposit without the permission of RBI. Also, the bank will not be able to give any liability or loan. This step has been taken to improve the financial condition of the bank and to protect the deposits of the depositors.
RBI has directed the bank to allow its customers to withdraw a maximum of Rs 10,000 from their savings or current account out of the total deposits. However, the bank reserves the right to adjust the outstanding loan of customers against their deposits. After this decision, bank depositors can also claim insurance on their deposits from Deposit Insurance and Credit Guarantee Cooperation (DICGC) up to a maximum of Rs 5 lakh.
RBI has clarified that this decision is not tantamount to cancellation of banking license. Until the financial condition of the bank improves, these restrictions will continue and the bank will continue its operations under the same. The objective of the Reserve Bank is that banks should improve their operations in a controlled manner so that customer confidence is maintained and financial losses can be avoided.
Such restrictions are often imposed when a bank’s cash position becomes weak and it is unable to provide full service to its customers. In the case of Baghat Bank, this step has been considered necessary to protect the interests of the depositors. RBI tries to keep the Indian banking system strong and stable by taking such effective steps from time to time.