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RBI laid restrictions on day to day operations of Mapusa Urban Bank

In one of the major developments took place in the banking sector of Goa the RBI (Reserve Bank of India) has laid the restrictions on The Mapusa Urban Co-operative Bank to not to allow the customers to withdraw above Rs. 1000 from any of their accounts including Current, Savings or any deposit accounts. This is considered to be a biggest setback to the Goa’s oldest co-operative sector bank. The RBI directives has come in the backdrop of bank’s CRR (Cash Reserve Ratio) is going into negative which is considered as a violation of banking laws.

The order issued by RBI says, “In the exercise of the powers vested with us under sub section (1) of Section 35 A of Banking Regulation Act, 1949 read with Section 56 of Banking Regulation Act, 1949, it is directed that Mapusa Urban Cooperative Bank of Goa Ltd from the close of business on July 24 not without prior approval in writing from RBI, grant renew of any loans and advances, make any investments, incur any liability such as borroval of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or agreement and sell, transfer or otherwise dispose of any of its properties or assets except to the extent and in the manner – a sum not exceeding Rs 1,000 or the total balance in every savings bank or current account or any other deposit account by whatever name called may be allowed to be withdrawn by a depositor provided that wherever such depositor is having liability to the bank in any manner that is either as a borrower or surety the amount may be adjusted first to the relevant borrowed accounts. The bank may renew the existing term deposits on maturity in the same name and same capacity or can incur any expenditure that may be required to be met by the bank in respect of the following terms – Salaries of employees, rent rates and taxes, electricity bills, printing, stationary bills, postage, etc, legal expenses comprising stamp duty, registration charges, arbitration frees which are payable at rates stipulated in the concerned statutes or rules of court, court fee in compliance with the court orders under provisions of statutes, payment of fees to the lawyers not exceeding Rs 5,000 in each case. Bank is allowed to pay premium payable to the deposit insurance and credit Guarantee Corporation.”

The founder of the bank & Ex-Union Law Minister, Ramakant Khalap said that he will ask RBI to review its decision and he assured the customer that they have their every penny is safe with the bank “We ask our customers not to panic and assure them that their every single rupee is safe,” Said Khalap. Banks board member met on late Saturday evening under Vice-chairman Gurudas Natekar and passed a resolution requesting RBI to reconsider its decision. They also reaffirm that banks financial condition is good, the FD and share capital have increased. Though Ramakant Khalap and his son, current Chairman Ashwin Khalap were not present for the meeting.

According to the sources the plans of bank’s new chairman Ashwin was in process of setting up of an ATMs across the state and also planning to expand into other states have been likely to be kept on hold after this new development.

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The restrictions were not applied only to the withdrawal by RBI but it has also directed the bank not to grant any more loans and advances, make any investments, incur any additional liabilities, including fresh deposits, disburse/agree to disburse any payment whether in discharge of liabilities/obligations or otherwise, enter into any compromise/agreement and sell, transfer or dispose of any properties or assets without prior approval. It has permitted the bank to meet expenses of employees’ salaries, gratuity/PF benefits, taxes, bills, certain premiums, invest in government-approved securities and towards capital from existing bank, under monthly advice to RBI.

According to the sources Ramakant Khalap has assured that the order of RBI will get revoked soon as they have already requested them to review the situation but due to the weekend the review has been delayed.  He also said that if RBI does not revoke the restrictions then the bank will approach the high court. He further said that the notice was completely unexpected but he also agreed that the bank is under RBI scanner for not compliance of section 11. He said that the bank has sought time to fulfill the provisions of section 11 within this year. He mentioned that the notice is just temperory setback and bank will hopefully overcome it.

Whatever the explanations are but the bank is presently under the rule of RBI and as per the present guidelines it restricts all the major operations for the 6 months time. Though the bankers see the silver line on the horizon of hope and they will surely try their best to come out from this situation. Meanwhile you can leave your valuable comments and suggestions on this issue over here.

Source: Various Sources

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