RBI imposes six-month restrictions on Valsad Mahila Nagrik Sahakari Bank, withdrawal freeze imposed

The Reserve Bank of India on Thursday imposed several restrictions on Valsad-based Valsad Mahila Nagrik Sahakari Bank due to its deteriorating financial condition. | Photo credit: FRANCIS MASCARENHAS/Reuters

The restrictions in the form of ‘Directions’ will remain in force for six months from Thursday’s closing time.

According to the Directions, without prior approval of the RBI, the bank cannot, among other things, grant or extend loans, make investments, accept liability and dispose of its assets.

“Considering the current liquidity position of the bank, the bank has been directed not to allow any amount from savings or current accounts or any other account of a depositor, but may set off loans against deposits…,” the RBI said.

According to the report, the Directions are necessary due to supervisory concerns arising from recent material developments at the bank, and to protect the interests of the bank’s depositors.

RBI said it has been in touch with the board and senior management of Valsad Mahila Nagrik Sahakari Bank in the recent past to improve its functioning.

“However, the bank’s lack of concrete efforts to address supervisory concerns and protect the interests of the bank’s depositors made the issuance of these directions necessary,” the report said.

The eligible depositors would be entitled to deposit insurance claim amount of their deposits up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

“The RBI continues to monitor the bank’s position and will take necessary actions, including adjustments to these guidelines, as necessary, depending on the circumstances and in the interest of depositors,” RBI said.

The central bank also said that the issuance of the Directions should not necessarily be construed as a withdrawal of the banking license.

The bank will continue to engage in banking activities, subject to the restrictions specified in the said guidelines, until its financial position improves.

Published on December 19, 2025