The Reserve Bank of India has extended directions for a further period of six months on Panihati Co-operative Bank based in Kolkata. The directions will continue to apply to the bank until April 23, 2015, subject to review.
It was on April 24, 2014 that the Reserve Bank had first placed the bank under directions for six months due to its very precarious financial position.
The Directions dictate that Panihati Co-operative Bank cannot, without the prior approval of the Reserve Bank in writing, grant or renew any loans and advances, make any investment, incur any liability including borrowal 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 arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the Reserve Bank’s directions.
Also, the bank cannot allow its depositors to withdraw a sum exceeding Rupees one thousand of the total balance in every savings bank or current account or any other deposit account subject to conditions stated in the Reserve Bank of India’s directions.
However, the issue of the directions by the Reserve Bank should per se not be construed as cancellation of banking licence by the Reserve Bank. The bank will continue to undertake banking business with restrictions till its financial position improves. The Reserve Bank may consider modifications of these directions depending upon circumstances.
