The Reserve Bank of India on Friday imposed severe restrictions on the Kapol Cooperative Bank Ltd by barring depositors from withdrawing over Rs 3,000 from any type of accounts, according to a notification.
The RBI has also restricted the financially troubled bank from granting or renewing loans and advances or making any investments, incurring any liability including borrowal of funds, and accepting fresh deposits without prior written approval of the apex bank.
The KCBL will also not be able to enter into any compromise or arrangements, sell, transfer or dispose of any of its assets and properties as per the RBI's directions.
However, the RBI made it clear that this should not be construed as cancellation of banking licence of KCBL, and the bank can continue business with restrictions till its financial position improves.
The latest move comes nearly three years after the RBI had appointed an administrator and later superseded the Mumbai-headquartered KCBL's board in June 2014 due to its weak capital adequacy and high-level non-performing assets.
Founded in 1939, the KCBL has around 20 branches in Mumbai and Gujarat with over 77,000 shareholders and a customer-base of around 250,000.