RBI extends action period on Indian Mercantile Co-operative Bank

Case Brief

The Reserve Bank of India extended the Directions already in force against Indian Mercantile Co-operative Bank Ltd., Lucknow for another three months, making them effective up to December 11, 2015, subject to review. The bank had been under these directions since June 12, 2014. The directions restricted the bank from granting or renewing loans and advances, making investments, incurring liabilities including borrowings and acceptance of fresh deposits, making payments except as permitted, entering into compromises or arrangements, and selling or disposing of assets except as notified by RBI. Depositors were permitted to withdraw up to ₹1,00,000 from each savings, current or other deposit account on one occasion during the entire directions period. The order was issued under Section 35A of the Banking Regulation Act, 1949 read with Section 56. RBI also stated that the directions should not be construed as cancellation of the banking licence.