Reserve Bank imposes curbs on troubled coop Kapol Bank

The Reserve Bank on Friday imposed severe restrictions on the operations of Kapol Cooperative Bank, including a cap of Rs 3,000 on deposit withdrawals.

The apex bank issued certain directions to the Mumbai-based cooperative bank which included allowing depositors to withdraw only up to Rs 3,000 from their savings or current accounts, an RBI statement said.

The troubled bank will also not be able to renew any loans and advances, make any investment, incur any liability, including borrowing of funds and acceptance of fresh deposits, the RBI said. It has also been prohibited from disbursing any payments and sell any of its assets.

The RBI, however, clarified that these restrictions should not be construed as a cancellation of the bank's license. “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,” it said.

The bank has 2.5 lakh customers, 77,308 shareholders and 338 employees.

Kapol Co-operative Bank was founded in 1939 by Late Khushaldas Kurji Parekh with "an objective to service the downtrodden and economically weaker sections of the society", the bank says on its website. Its last annual report for 2012-13 showed a profit of Rs 1.85 crore at the end of March 2013, down from Rs 2.88 crore the previous year.