RBI extends action period on Jamkhed Merchants Co-operative Bank

Case Brief

The Reserve Bank of India issued Directions under Section 35A of the Banking Regulation Act, 1949 (as applicable to co-operative societies) read with Section 56 to Jamkhed Merchants Co-operative Bank Ltd. The directions prohibit the bank, from the close of business on April 12, 2016, from undertaking several core activities without prior written approval of RBI, including granting or renewing loans and advances, making investments, incurring liabilities such as borrowings and fresh deposits, disbursing payments, entering into compromises or arrangements, and selling or transferring assets. Depositor withdrawals from savings, current, or any other deposit account are capped at ₹1,000 per account, subject to the stated conditions. The release expressly notes that the directions should not be construed as cancellation of banking licence and that the bank will continue banking business with restrictions until its financial position improves.