Case Brief
The Reserve Bank of India issued directions under Section 35A of the Banking Regulation Act, 1949 (as applicable to co-operative societies) read with Section 56 to The Arjun Urban Co-operative Bank Ltd., Solapur, Maharashtra. Effective from the close of business on August 7, 2012, the bank was prohibited from undertaking several core activities without prior RBI approval, including granting or renewing loans and advances, making investments, incurring liabilities, accepting fresh deposits, disbursing payments, entering into compromises or arrangements, and disposing of assets, except as specifically permitted. The directions also capped withdrawals from each deposit account at Rs 1,000, subject to stated conditions. RBI stated that the issuance of these directions should not be construed as cancellation of banking licence and that the bank would continue business under restrictions until its financial position improved.
Action Snapshot
- Primary Impact
- Business restriction
- Entity Type
- Co-operative bank
- Location