RBI Imposes Severe Restrictions on Mogaveera Co-operative Bank Over Financial Concerns
Reserve Bank of India Issues Directions Against Mogaveera Bank Ltd.
The Reserve Bank of India (RBI) has issued stringent operational directions against the Mogaveera Co-operative Bank Ltd., Bombay. These directives restrict almost all major financial activities of the bank, effective from June 12, 2026. The RBI action was taken under Section 35 A read with Section 56 of the Banking Regulation Act, 1949.The directions state that without prior written approval from the RBI, the bank cannot grant or renew any loans and advances. Furthermore, it is prohibited from making new investments, incurring liabilities including borrowing funds, or accepting fresh deposits.
Bank Activities Severely Restricted by Regulatory Action
Under the new RBI directives, Mogaveera Co-operative Bank Ltd. faces broad limitations on its business operations. The bank is barred from disbursing any payments that discharge its liabilities or obligations to others. It must also refrain from entering into any compromise or arrangement.A significant restriction requires the bank to sell, transfer, or otherwise dispose of any of its properties or assets. These restrictions are applicable unless specifically notified otherwise in the RBI Directions dated June 11, 2026.
Permitted Operations and Liquidity Guidelines
Despite the stringent measures, certain limited operations have been permitted for the bank's survival. The RBI has directed that the bank may permit a withdrawal of a sum not exceeding ₹1,00,000 from any savings or current account deposit.The directives also allow the bank to set off loans against deposits, provided all stated conditions in the official RBI Directions are met. Banks are allowed to incur necessary expenditures for essential items such as employee salaries, rent, and electricity bills as specified by the regulatory body.
Depositor Protections Under DICGC Act
In response to the supervisory concerns, the Reserve Bank of India has clarified matters regarding depositor protection. Eligible depositors are entitled to receive deposit insurance claim amount up to a monetary ceiling of ₹5,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC).This benefit is applicable under the provisions of the DICGC Act, 1961, provided the concerned depositors submit a willingness certificate. Depositors seeking further information are advised to contact bank officials or refer to the DICGC website.
Oversight and Future Outlook for Mogaveera Bank
The RBI has emphasized that the issuance of these directions does not equate to the outright cancellation of the banking license. The bank will continue to undertake banking business, albeit subject to the specified restrictions, until its financial position improves.The RBI confirmed it continues to closely monitor the bank’s standing. Depending on evolving circumstances and in the interest of depositors, necessary actions, including modifications to these directions, will be undertaken by the regulator. These directives are set to remain in force for a period of six months from June 12, 2026, and are subject to review.
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