Recorded RBI impact
License suspension
License suspension · Fresh imposition
Published by RBI
2 Nov 2002
Case Brief
On RBI's application, the Central Government issued an Order of Moratorium against Nedungadi Bank Ltd. The moratorium ran from the close of business on November 2, 2002 through February 1, 2003. During this period, the bank could make only the payments specified in the order, and depositors were allowed to withdraw up to Rs. 5,000 from their accounts. RBI was to examine options such as amalgamation and complete plans aimed at protecting public deposits.
Why RBI Acted
The Central Government issued an Order of Moratorium in respect of Nedungadi Bank Ltd. on RBI's application. The order was passed in the public interest, in the interest of depositors and the banking system. During the moratorium period, the bank could make only those payments specified in the order, and depositors were permitted to withdraw up to Rs. 5,000 from savings, current, or other deposit accounts. RBI was to consider options including amalgamation and finalise plans to ensure public deposits were fully protected.
Operating Impact
Nedungadi Bank's operations were severely constrained for the moratorium period, with only specified payments allowed and depositor withdrawals capped at Rs. 5,000. Depositors and counterparties were directly affected, and RBI/Central Government would use the period to decide the bank's next steps, including possible amalgamation.
Action Facts
- Primary Impact
- License suspension
- Order Date
- 2 Nov 2002
- Effective From
- 2 Nov 2002
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Bank