RBI imposes operational restrictions with withdrawal limits on Mogaveera Co-operative Bank

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Mogaveera Bank restrictions by RBI

Highlights

The Reserve Bank of India (RBI) has imposed several operational restrictions, including a withdrawal limit, on Mogaveera Co-operative Bank for six months starting from June 12, 2026.
During the restriction period, account holders can withdraw only up to ₹1,00,000, while deposit insurance up to ₹5,00,000 is available under DICGC.
RBI clarified that this is not a license cancellation; the bank will continue to operate within limited restrictions and the situation will continue to be reviewed.

This article was translated from the original. Read the original version by our correspondent here.

RBI Directives and Immediate Restrictions

Reserve Bank of India, in its press release dated June 11, 2026, stated that special instructions have been issued to Mogaveera Co-operative Bank Ltd., Bombay, under Section 35A read with Section 56 of the Banking Regulation Act, 1949. These instructions take effect after the close of business on June 12, 2026, and remain in force for six months, although they may be reviewed.

Under these restrictions, the bank cannot grant or renew any loan or advance, make any investment, incur any new liability, or accept new deposits without prior written approval from the RBI. The bank is also not permitted to make payments, settle, or otherwise dispose of its assets except as specified in the directives.

Considering the bank’s current liquidity position, the RBI has allowed depositors to withdraw up to ₹1,00,000 from their savings, current, or any other account. Subject to the conditions specified in the directives, the bank is also permitted to adjust loans against deposits, while essential expenses such as employee salaries, rent, and electricity bills may continue to be paid.

Impact on Depositors and Regulatory Oversight

The central bank has stated that it has been continuously engaged with the bank’s board and senior management to improve its operations. However, due to the lack of concrete efforts to address supervisory concerns and protect depositors’ interests, these directives have become necessary.

Eligible depositors, under the DICGC Act, 1961, will be entitled to receive deposit insurance claim amounts up to ₹5,00,000 after the necessary consent and verification. For more information, depositors can contact bank officials, and relevant details are also available on the DICGC website.

The RBI has clarified that these directives should not be construed as the cancellation of the banking license. The bank will continue to conduct banking business within these restrictions until its financial position improves, and the RBI will continue to monitor the situation and make changes to the directives or take other steps in the interest of depositors as necessary.

Our previous report on government and RBI measures to boost foreign capital inflows highlighted that, amid pressure on the rupee and foreign portfolio outflows, steps such as tax relief for FPIs on government bonds, expansion of the Fully Accessible Route, and measures to increase forex liquidity were taken. The article also noted that provisions like FCNR(B) deposits and the forex swap window could somewhat ease balance of payments and banking funding pressures, though they are not considered a complete solution.

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