RBI Imposes Six‑Month Restrictions on Gujarat Rajya Karmachari Co‑op. Bank

The Reserve Bank of India has issued strict Directions to The Gujarat Rajya Karmachari Co‑op. Bank Ltd. in Ahmedabad, placing significant operational restrictions on the institution. The order, issued under Section 35A read with Section 56 of the Banking Regulation Act, 1949 (AACS), takes effect from the close of business on March 11, 2026.

The move follows an assessment of the bank’s liquidity profile, which the RBI found inadequate to support normal operations. As a result, several banking activities have been frozen unless the regulator provides prior written approval.

Scope Of Restrictions Imposed By RBI

The Directions prohibit the bank from granting or renewing loans and advances until further notice. The institution is also barred from making investments, accepting fresh deposits or incurring new liabilities.

Additionally, it cannot disburse payments, settle obligations or dispose of assets except for actions permitted under the Directions. The RBI has instructed the bank to display the full text of the directive on its premises and website for public awareness.

Withdrawal Limitations for Depositors

Considering the bank’s strained liquidity, the RBI has barred withdrawal of funds from savings, current and other deposit accounts. Depositors will not be allowed to access their balances until the regulator modifies or lifts the Directions.

However, the bank may set off loans against deposits under prescribed conditions. Essential expenditure such as staff salaries, rent and utilities may continue.

Supervisory Concerns Leading to Action

The RBI noted that the bank’s Board and Senior Management had been engaged repeatedly in recent months to address operational issues. Despite these interactions, the bank failed to take concrete corrective measures.

The regulator highlighted deficiencies that posed risks to depositors and the stability of the institution. The Directions therefore became necessary to contain vulnerabilities.

Deposit Insurance Entitlements for Customers

Eligible depositors may claim insurance coverage up to ₹5,00,000 through the Deposit Insurance and Credit Guarantee Corporation. Claims will be processed after verification and submission of willingness by the concerned depositors.

Bank officials are responsible for guiding customers through the claim procedure. Additional information is available on the DICGC website for public reference.

Read More: RBI Issues Final Amendment Directions on Counterparty Credit Risk Framework.

Conclusion

The Directions imposed on The Gujarat Rajya Karmachari Co‑op. Bank Ltd. represent a temporary but significant restriction on its operations. The move follows persistent supervisory concerns and a lack of corrective action from the institution’s management.

The bank remains operational but subject to stringent controls until its financial position improves. The Directions will remain in force for six months from March 11, 2026, subject to periodic review.

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