The Reserve Bank of India (RBI) has issued guidelines for banks to ensure fairness and transparency to the penal interest rates charged by them.
The restrictions have been imposed on the two cooperative banks by the Reserve Bank of India in wake of their deteriorating financial positions
The restrictions came into effect after the close of business on Friday and will remain in force for six months, the Reserve Bank said in a statement
UCBs have to get the policy approved by their board and comply with the Financially Sound and Well Managed (FSWM) Norms
This action is based on deficiency in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers, RBI said
He emphasised on the reforms in urban cooperative banks and asked them to make structural changes, computerise accounting processes and infuse young talent in the sector
Restrictions on Sri Mallikarjuna Pattana Sahakari Bank Niyamita, Maski and Nashik Zilla Girna Sahakari Bank, Nashik will remain in force for six months
RBI has expanded the individual loan limits that co-operative banks can offer and has allowed rural co-operative banks to extend finance to commercial real estate.