RBI imposes restrictions on Musiri Urban Co-operative Bank


The Reserve Bank of India (RBI) has imposed restrictions on Musiri Urban Co-operative Bank in Tamil Nadu, following a deterioration in its financial position. The restrictions will be in place for six months from March 2, 2023, and include a cap on withdrawal limits for depositors.

The bank will be allowed to withdraw only a maximum of Rs 1,000 per account holder during this period. In addition, the bank will not be allowed to grant or renew any loans or advances, make any investment, or incur any liability, without the prior approval of the RBI.

According to the RBI, the bank’s financial position has been “continuously deteriorating” with no sign of improvement, and its net worth has been fully eroded. The bank’s deposits have also been declining over the past few years, and its losses have been increasing.

The RBI has also appointed a committee to oversee the bank’s functioning during the period of the restrictions. The committee will be responsible for ensuring that the bank’s operations continue smoothly and that the interests of depositors are protected.

The Musiri Urban Co-operative Bank is a small urban cooperative bank with just one branch in Musiri town in Tamil Nadu. It has a total of 4,347 depositors and deposits of Rs 25.53 crore, as of March 31, 2022. The bank has been in operation for over 35 years and is licensed by the RBI.

The RBI has said that it will closely monitor the bank’s operations during the period of the restrictions and take further action as necessary to protect the interests of depositors.

The RBI’s action against Musiri Urban Co-operative Bank comes amid increasing concerns about the financial stability of co-operative banks in India. Several co-operative banks have faced financial problems in recent years, and the RBI has imposed restrictions on several of them.

Co-operative banks are smaller banks that are owned and operated by their members. They are subject to regulation by both the RBI and state governments. While many co-operative banks are financially sound and have a good track record, there have been cases of mismanagement and fraud in some banks.


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