RBI extends guidelines issued to Mudhol Co-operative Bank by 3 months

RBI extends guidelines issued to Mudhol Co-operative Bank by 3 months

In April 2019, the RBI had imposed certain restrictions on the Karnataka-based bank barring it from granting or renewing any loans and advances, accepting fresh deposits, or making any investments, without prior approval from the regulator in writing

The Reserve Bank of India (RBI) said Mudhol Co-operative Bank would continue with its banking business but with restrictions until its financial positive improves

The Reserve Bank of India (RBI) on Tuesday extended the directives issued to the Mudhol Co-operative Bank last year for a further period of three months, from July 8, 2020 to October 7, 2020. The guidelines were issued under Section 35A of the Banking Regulation Act, 1949.

The directives were last extended up to July 7, 2020. Meanwhile, other terms and conditions (of the directives) shall remain unchanged.

In April 2019, the apex bank had imposed certain restrictions on the Karnataka-based bank barring it from granting or renewing any loans and advances, accepting fresh deposits, or making any investments, without prior approval from the RBI in writing. The directives came into effect on April 8, 2019.

The regulator said the bank would continue with its banking business but with restrictions until its financial positive improves.

"In particular, a sum not exceeding Rs 1,000 of the total balance in every savings bank or current account or any other deposit account may be allowed to be withdrawn subject to conditions stated in the RBI directions," the RBI said in its notification.

The banking regulator, however, added that the directions issued to the co-operative bank should not, per se, be construed as cancellation of its banking licence, stating further that the bank will continue to undertake banking business with restrictions until its final position improves.