RBI extends period of restriction on two co-operative banks

The Reserve Bank of India (RBI) on Wednesday extended the period of restriction under Section 35A read with Section 56 of the Banking Regulation Act, 1949 on two co-operative banks -- The Laxmi Co-operative Bank Ltd., Solapur, and Sri Guru Raghavendra Sahakara Bank Niyamitha, Bengaluru -- for up to three and six months, respectively.

For Laxmi Co-operative Bank, the central bank stated that these directions shall continue to apply to the bank for a further period of three months from May 12, 2022 to August 11, 2022, subject to review. The directions stipulate certain restrictions and/or ceiling on withdrawal/acceptance of deposits. A copy of directions is displayed at the bank’s premises for interested members of public to peruse, it added.

"RBI may consider modifications of the directions depending upon the circumstances. The issue of directions should not per se be construed as cancellation of banking license by the Reserve Bank of India. The bank will continue to undertake banking business with restrictions till its financial position improves," it further added.

Similarly, for Sri Guru Raghavendra Sahakara Bank Niyamitha, RBI notified that the central bank is satisfied that in the public interest, it is necessary to extend the period of operation. Accordingly, the Reserve Bank of India, which has been extending the validity of restrictions from time to time, shall continue to do so for a further period of six months from May 11, 2022 to November 10, 2022, subject to review.

It also added that all other terms and conditions of the directives under reference shall remain unchanged.