Rajkot-based co-op bank's clearing services frozen

The Reserve Bank of India (RBI) has frozen the clearing services of Rajkot Mahila Nagrik Sahakari Bank Ltd (RMNSBL).

Urban Banks Department of the RBI has issued directions to RMNSBL for not participating in clearing w.e.f. November 1 and copy of same has been endorsed by the Rajkot Bankers Clearing House for following the instructions.

Letter endorsed by M Ramakrishnan, Assistant General Manager of UBD of RBI as addressed to Rajkot Bankers Clearing House at the State Bank of India and Bank of Baroda narrates of freezing the clearing business of RMNSBL vide Directions under Section 35A of Banking Regulations Act 1949.

RMNSBL is a co-operative bank having a base of 13,000 depositors with Rs 10 crore deposits and Rs 8 crore towards loans and advances, which experienced rush hours on Wednesday morning as withdrawal in permissible limit of Rs 1000 was only made available at the bank premises, "I deposited Centurion Bank's Cheque amounting to Rs 15,000 which was likely to be cleared, but to my surprise when I enquired about same, they said it will not be cleared today and I will not be able to withdraw more than Rs 1,000 vide the instructions issued by RBI," laments Nirmal Boricha, customer of RMNSBL.

However, when approached to Meena Thakore, Chairman of RMNSBL, told Business Standard, "Considering our financial position as stipulated on March 31, RBI has instructed us on a withdrawal limit of Rs 1,000 per account and the same has been instructed in view of complying recovery norms."

As there was a massive withdrawal of about Rs 3. 41 crore in March 2006, our balance sheets were affected accordingly and RBI having stringent norms to be adhered to for recovery of borrowings, this instruction have been issued, added Thakore.

Somehow, we have geared up our recovery operations and are sure of completing it in the stipulated time limit to be adhered as per the norms stipulated by RBI, assured Thakore. She requested bank members not to panic.