Recorded RBI impact
Business restriction
Business restriction · Fresh imposition
Published by RBI
7 Jan 2006
Case Brief
On RBI's application, the Central Government issued an order placing Ganesh Bank of Kurundwad Ltd. under moratorium. The moratorium runs from the close of business on January 7, 2006 up to and inclusive of April 6, 2006, or earlier if alternate arrangements are put in place. During this period, the bank may make only those payments permitted under the moratorium order, and depositors are allowed to withdraw balances from their accounts only up to Rs. 5,000 through any branch. The release says the action was taken in public interest, in the interest of depositors, and for banking-system stability, and notes the bank's weak financial position, including negative net worth, negative CRAR, high NPAs, and erosion of depositor money.
Why RBI Acted
On RBI's application, the Central Government issued an Order of Moratorium in respect of Ganesh Bank of Kurundwad Ltd. The moratorium was imposed in the public interest, in the interest of depositors and the banking system. During the moratorium period, the bank may make only the payments specified in the order, and depositors may withdraw balances from savings, current or other deposit accounts subject to a ceiling of Rs. 5,000 per depositor per branch. The release also notes weak financials, including negative net worth and CRAR, high NPAs, erosion of depositor funds, and the bank's inability to present a credible capital-raising plan.
Operating Impact
The bank's operations are constrained during the moratorium period, especially payments and depositor withdrawals. Depositors face a temporary cap of Rs. 5,000 on withdrawals, while RBI considers options such as amalgamation or other alternate arrangements to protect public deposits.
Action Facts
- Primary Impact
- Business restriction
- Order Date
- 7 Jan 2006
- Effective From
- 7 Jan 2006
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Bank