RBI extends action period on Suri Friends’ Union Cooperative Bank

Case Brief

The Reserve Bank of India extended the existing directions against The Suri Friends’ Union Cooperative Bank Limited, Suri, West Bengal, from January 07, 2015 to July 06, 2015, subject to review. The original directions were issued on April 7, 2014 and had already been extended once, due to the bank’s very precarious financial position. During the currency of the directions, the bank cannot undertake several core activities without prior RBI approval, including granting or renewing loans and advances, making investments, incurring liabilities, accepting fresh deposits, making payments, entering compromises or arrangements, or disposing of assets outside the notified exceptions. Depositors are allowed to withdraw only up to Rs 1,000 from each savings bank, current, or other deposit account, subject to the stated conditions. RBI also clarified that the directions should not be construed as cancellation of the banking licence, and that the bank may continue banking business with restrictions until its financial position improves.