RBI extends action period on Millath Co-operative Bank

Case Brief

RBI issued/continued Directions under Section 35A of the Banking Regulation Act, 1949 read with Section 56 (AACS) against Millath Co-operative Bank Ltd., Davangere District, Karnataka. Effective from the close of business on May 08, 2019, the bank could not, without prior RBI approval, grant or renew loans and advances, make investments, incur liabilities including borrowings and fresh deposits, disburse payments, enter into compromises or arrangements, or dispose of assets except as permitted in the earlier directions dated April 26, 2019. The release states that withdrawals from deposit accounts were capped at ₹1,000 subject to the stated conditions. RBI clarified that the directions should not be construed as cancellation of the banking licence and that the bank may continue to undertake banking business with restrictions until its financial position improves.