The Reserve Bank had initially placed the bank under directions for six months on July 30, 2013 due to its very precarious financial position and the validity of which was subsequently extended on two occasions up to October 29, 2014.
According to the Reserve Bank’s directions, Baranagar 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.
In particular, the bank can allow its depositors to withdraw a sum not exceeding Rupees one thousand only 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.