Sources in the office of the State Registrar of Co-operative Societies said the apex bank has slapped a notice on APCB under Section 36 A of the Banking Regulation Act, and restricted APCB from extending its area of operations.

APCB has eight branches, including one in Dhandhuka, with total deposit of Rs 89 crore. It has a depositor base of 66,000; advances of Rs 52 crore, and NPA of 74 per cent as of March 31, 2008.

Though the NPA level has come down since March 2008, the bank still has to improve its capital adequacy ratio. As such, the RBI has advised it to submit a detailed action plan.

According to the Reserve Bank stipulation, co-operative banks have to maintain a minimum capital adequacy ratio of nine per cent, according to state government officials.

After being served with a notice under Section 36 A, the bank cannot declare or disburse dividend and also cannot shift its premises to a new location from the existing one. But it shall continue with its regular banking operations until further orders from the RBI. This will not affect the investors at this point of time, according to state officials.

Meanwhile, panic spread among depositors of the Memon Co-operative Bank during the day on Tuesday following rumours of the bank going bust. Long queues were seen at the Danilimda branch of the Mumbai-based bank set up by late Zakaria Aghadi.