RBI extends action period on Sikar Urban Co-operative Bank

Case Brief

The Reserve Bank of India issued Directions to Sikar Urban Co-operative Bank Ltd., Sikar under Section 35A of the Banking Regulation Act, 1949 (AACS) read with Section 56. Effective from the close of business on November 9, 2018, the bank was barred, without prior RBI approval, from granting or renewing loans and advances, making investments, incurring liabilities (including borrowing funds and accepting fresh deposits), disbursing or agreeing to disburse payments, entering into compromises or arrangements, and selling, transferring, or otherwise disposing of its properties or assets, except as covered by the prior RBI directions dated October 26, 2018. The public was also informed that withdrawals from each savings/current/other deposit account were limited to ₹2,000, subject to conditions. RBI clarified that these directions do not amount to cancellation of the bank’s licence and that the bank may continue banking business only with restrictions until its financial position improves, with possible future modification depending on circumstances.