RBI Cracks Down on Yashwant Bank
• Six-Month Freeze on Bank Operations
• Depositors Get ₹5 Lakh Insurance Cover
Unmesh Gujarathi
Sprouts News Exclusive
Contact: +91 9322755098
Sprouts News Exclusive
Contact: +91 9322755098
The Reserve Bank of India has imposed six-month restrictions on Yashwant Cooperative Bank due to its weak financial condition. The bank cannot issue new loans or sell assets without RBI approval. Allegations of ₹127 crore loan fraud and political interference have triggered regulatory action to protect depositor interests.
Contents
RBI Cracks Down on Yashwant Bank• Six-Month Freeze on Bank Operations• Depositors Get ₹5 Lakh Insurance CoverRBI’s Preventive Action Aimed at Depositor ProtectionNo License Cancellation, But Operations Significantly CurtailedAlso Read: MEIL Faces Supreme Court Blow as ₹14,000 Cr MMRDA Tender Cancelled.Allegations of Irregular Loans and BJP Infighting SurfaceSprouts News Assessment: What Lies Ahead for Yashwant Bank
In a significant regulatory move, the Reserve Bank of India (RBI) has imposed strict restrictions on Yashwant Cooperative Bank, citing its precarious financial position. The directive, issued on Thursday, May 29, will remain in effect for six months. During this period, the bank is barred from issuing fresh loans, renewing existing credit, investing funds, or selling assets without prior RBI approval.
This action directly affects the bank’s operational autonomy. Originally based in Phaltan and currently headquartered in Karad, Yashwant Cooperative Bank has drawn scrutiny following allegations raised by BJP MP Medha Kulkarni. The RBI explicitly noted that the bank’s financial health has deteriorated significantly, necessitating regulatory intervention to safeguard depositor interests.
RBI’s Preventive Action Aimed at Depositor Protection
The RBI clarified that multiple advisories had previously been issued to Yashwant Bank’s senior management regarding necessary reforms. However, due to unsatisfactory compliance and continued mismanagement, restrictions have now been enforced. This strategic move aligns with the central bank’s mandate to protect the interests of depositors and maintain banking system stability.
To reassure depositors, the RBI has confirmed that all accounts are covered under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme, offering insurance protection of up to ₹5 lakh per account. Affected depositors must initiate the claim process through the official DICGC portal.
Sprouts News has learned that RBI officials visited the bank’s premises on Thursday to examine financial records and personally inform the management about the imposed limitations. Currently, the bank is only permitted to incur expenditures up to ₹1,000 and continue loan recovery operations. Essential expenses such as staff salaries, electricity bills, and rent may be permitted under special allowances.
No License Cancellation, But Operations Significantly Curtailed
It is critical to note that this regulatory move does not imply cancellation of Yashwant Bank’s license. The institution is still functional, albeit under stringent constraints. This includes a freeze on all non-essential financial activities unless expressly authorized by the RBI.
The imposed curbs are part of a broader framework the central bank applies when cooperative banks fail to maintain financial discipline. As per Sprouts News sources, such actions are intended to force timely corrective measures and may be lifted if the bank complies with regulatory conditions during the review period.
Also Read: MEIL Faces Supreme Court Blow as ₹14,000 Cr MMRDA Tender Cancelled.
Allegations of Irregular Loans and BJP Infighting Surface
The roots of this crisis seem to extend beyond financial mismanagement. According to reports, loans worth ₹127 crore were allegedly sanctioned to fake or non-functional institutions, raising suspicions of systemic fraud. Former bank officials, including previous chairpersons, are reportedly under investigation in this matter.
Sprouts News has confirmed that BJP MP Medha Kulkarni had escalated the issue to Union Home Minister Amit Shah, highlighting the need for a deeper probe. Party insiders suggest that internal conflicts within the BJP’s local faction may have played a role in bringing the matter to light, indicating a possible political dimension to the bank’s woes.
Sprouts News Assessment: What Lies Ahead for Yashwant Bank
The regulatory clampdown signals a turning point for Yashwant Cooperative Bank. Unless swift reforms are implemented, the bank risks prolonged restrictions or even potential cancellation of its license. Depositors and stakeholders must stay alert and regularly check DICGC and RBI portals for updates.
This case serves as a cautionary tale for India’s cooperative banking sector, which remains vulnerable to local political influence and governance lapses. Sprouts News will continue to monitor developments and provide verified updates on this unfolding financial investigation.
