Thrissur: Depositors of the Irinjalakuda Town Co-operative Bank will be allowed to withdraw up to a maximum of ₹10,000 from their savings or current accounts for the next six months after the Reserve Bank of India (RBI) imposed severe financial restrictions on the Congress-led co-operative bank.

The bank has also been barred from issuing loans and accepting new deposits. The RBI announced the new curbs in a circular issued on July 30. The bank has also been restricted from borrowing money, transferring, or selling its assets. However, borrowers are allowed to set off loans against deposits, the circular noted. These restrictions will remain in place for six months starting July 30.

The bank is permitted to spend money only for essential expenses such as salaries, rent, and electricity charges.

"RBI has in the recent past engaged with the board and senior management of the bank for improvement in its functioning. However, lack of concrete efforts taken by the bank to address the supervisory concerns, as well as non-infusion of capital funds to maintain minimum regulatory capital, necessitated issuance of these directions to protect the interest of depositors of the bank," the RBI circular said.

The bank will be allowed to continue to function under restrictions until its financial position improves. The RBI will monitor the situation closely and take necessary actions. However, the bank’s licence has not been revoked, the RBI clarified in its order.

Upon hearing the news, a large number of depositors rushed to the bank. Despite their requests to withdraw the full amount of their deposits, bank officials informed them that only ₹10,000 could be disbursed per person as per the RBI's directive.