The Union Ministry of Finance on Tuesday placed Tamil Nadu-based private sector lender Lakshmi Vilas Bank under moratorium till December 16 and capped the withdrawal limit at Rs 25,000.

During the moratorium, the depositors can withdraw more than Rs 25,000 for “unforeseen circumstances” after getting permission from the Reserve Bank of India, a Gazette notification said. The circumstances include medical treatment, higher education, marriage and other ceremonies and any unavoidable emergency. The finance ministry said that the RBI may allow it under a special or a general order and that the conditions are limited to the depositors or people directly dependent on them.

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Further, the bank is also not permitted to make payments to any creditor of over Rs 25,000 without the written permission from the central bank.

“The Central Government hereby further directs that the Lakshmi Vilas Bank Limited may, during the period of the moratorium imposed on it, make the following further payments, namely, the amounts for repaying loans or advances granted against Government securities or other securities, to the Lakshmi Vilas Bank Limited by the Reserve Bank of India or the State Bank of India or by any other bank and remaining unpaid on the date on which this Order comes into force.”

— Gazette Notification

The RBI has also superseded the board of directors of the bank for the moratorium period because of the “serious deterioration in the financial position of the bank”. It has appointed TN Manoharan, former non-executive chairman of Canara Bank, as the administrator. “This has been done to protect the depositors’ interest,” the central bank said.

In a press release, the RBI said that it had no alternative but to apply to the central government for imposing a moratorium in “the absence of a credible revival plan, with a view to protect depositors’ interest and in the interest of financial and banking stability”.