On October 3, the RBI permitted the bank's depositors to withdraw up to Rs 25,000 of the total balance in their accounts.
"The financial position of the bank has been substantially impaired due to fraud perpetrated on it by certain persons," the RBI said in a statement.
"As soon as the matter came to the notice of Reserve Bank of India, action was taken in appointing an Administrator and ensuring that the bank's available resources are protected and not misused or diverted."
The Economic Offences Wing of Maharashtra Police has started its investigations into the matter.
"Further, forensic auditors have been appointed by the Administrator of the bank to look into the related transactions," the statement said.
"The Administrator and the 3 member Advisory Committee appointed by the RBI in terms of section 36AAA(5)(a) read with Section 56 of the Banking Regulation Act 1949 are working for speedier resolution of the various issues being faced by the bank in conducting its operations."