RBI extends action period on Jamkhed Merchants Co-operative Bank

Case Brief

The Reserve Bank of India extended the existing directions applicable to Jamkhed Merchants Co-operative Bank Ltd., Ahmednagar, Maharashtra for another six months, effective from October 13, 2016 to April 12, 2017, and modified the directive while keeping its other terms unchanged. Under the revised directions, a depositor may withdraw up to ₹10,000 from each savings, current, term deposit or other deposit account, subject to any adjustment against liabilities to the bank. RBI also required the bank to keep the amount needed for depositor payments separately in an escrow account and/or earmarked securities. The release makes clear that the extension and modification should not be construed as RBI being satisfied with the bank’s financial improvement.