RBI bars bank from fresh loans, investments

The RBI has barred Sabarkantha-based Khedbrahma Nagarik Sahakari Bank from undertaking any major activities like granting fresh loans and making new investments till its financial position improves.

The RBI has barred Sabarkantha-based Khedbrahma Nagarik Sahakari Bank from undertaking any major activities like granting fresh loans and making new investments till its financial position improves.

"RBI has issued certain directions to the Khedbrahma Nagarik Sahakari Bank Ltd, Khedbrahma, Sabarkantha (Gujarat), whereby as from the close of business as on October 31, 2011, the aforesaid bank shall not, without prior approval in writing from the RBI, grant or renew any loans and advances, make any investment...," the central bank said in a statement.

In addition, the bank has been directed not to incur any liability toward borrowing and lending of funds or accept fresh deposits, other than disbursement of payments in discharge of its existing liabilities and obligations.

The Reserve Bank has also barred it from entering into any arrangement to seal or transfer any of its properties or assets.

The central bank, however, did not give any details on action being contemplated with respect to Khedbramha Nagarik Sahakari Bank.

"The bank will continue to undertake banking business with the restrictions till its financial position improves," the RBI added.

In a separate statement, the RBI said that it has imposed a penalty of Rs 5 lakh on Ahmedabad-based Shreenath Cooperative Bank for violation of various banking norms.

The RBI had earlier issued a show cause notice to the bank, in response to which Shreenath Cooperative Bank had submitted a written reply.

"After considering the bank's reply in the matter and submission made during the personal hearing, the RBI came to the conclusion that the violation was substantiated and warranted imposition of the penalty," the statement said.