RBI extends action period on Suri Friends Union Co-operative Bank

Case Brief

RBI issued directions under Section 35A of the Banking Regulation Act, 1949 read with Section 56 to The Suri Friends Union Co-operative Bank Ltd., Birbhum, West Bengal. The directions, effective from the close of business on April 7, 2014, restrict the bank from granting or renewing loans and advances, making investments, incurring liabilities including borrowing and acceptance of fresh deposits, disbursing payments, entering into compromises or arrangements, and disposing of assets without prior RBI approval, except as covered by the earlier March 28, 2014 directions. Depositors can withdraw only up to Rs 1,000 from each savings/current/other deposit account, subject to conditions. RBI also clarified that the directions do not amount to cancellation of the banking licence and that the bank may continue business with restrictions until its financial position improves.