RBI extends action period on Panihati Co-operative Bank

Case Brief

The Reserve Bank of India extended the directions already in force against The Panihati Co-operative Bank Ltd., Panihati, Kolkata, West Bengal, for a further six months from April 24, 2015 to October 23, 2015, subject to review. The order was originally imposed on April 24, 2014 and had already been extended once before. The RBI said the bank was in a very precarious financial position. The directions, issued 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, making payments, entering into compromises or arrangements, and selling or disposing of assets except as permitted. Depositors may withdraw only up to ₹1,000 per savings/current/other deposit account, subject to conditions. The release also clarifies that the directions should not be construed as cancellation of the banking licence, and that the bank will continue banking business with restrictions until its financial position improves.