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

Case Brief

The Reserve Bank of India extended the Section 35A directions applicable to The Suri Friends’ Union Co-operative Bank Ltd., Suri, West Bengal for six more months, from July 07, 2015 to January 06, 2016, subject to review. The bank had originally been placed under directions on April 07, 2014 because of its very precarious financial position, and those directions had already been extended twice before this release. The order restricts the bank from granting or renewing loans and advances, making investments, incurring liabilities including acceptance of fresh deposits, disbursing payments, entering compromises or arrangements, and selling or otherwise disposing of assets without prior written approval from RBI. Depositor withdrawals are capped at Rs 1,000 per account, subject to the stated conditions. RBI clarified that the directions should not be construed as cancellation of the bank’s licence and that the bank may continue banking business with restrictions until its financial position improves.