RBI extends action period on Janata Commercial Cooperative Bank

Case Brief

The Reserve Bank of India extended the directions issued to The Janata Commercial Cooperative Bank Ltd., Khamgaon, Maharashtra for a further three-month period from March 14, 2015 to June 13, 2015, subject to review. These directions, imposed under Section 35A of the Banking Regulation Act, 1949 read with Section 56, restrict the bank from granting or renewing loans and advances, making investments, incurring liabilities including borrowings and acceptance of fresh deposits, disbursing payments, entering into compromises or arrangements, and selling or transferring assets except as specifically notified. Depositors were permitted to withdraw up to Rs. 1,000 from a savings, current, or other deposit account on one occasion during the directions period. RBI also clarified that the directions should not be construed as cancellation of the banking licence and that the bank would continue to undertake banking business with restrictions until its financial position improves.