RBI extends action period on Sri Gururaghavendra Sahakara Bank Niyamitha

Case Brief

RBI issued Directions under Section 35A of the Banking Regulation Act, 1949 read with Section 56 to Sri Gururaghavendra Sahakara Bank Niyamitha, Bengaluru, Karnataka. With effect from the close of business on January 10, 2020, the bank could not, without prior written approval of RBI, grant or renew loans and advances, make investments, incur liabilities including borrowings and acceptance of fresh deposits, disburse payments, enter into compromises or arrangements, or sell/transfer/dispose of assets except as provided in the earlier RBI Directions dated January 2, 2020. Withdrawals from deposit accounts were capped at ₹35,000 subject to specified conditions. RBI clarified that the directions should not be construed as cancellation of banking licence and that the bank would continue business with restrictions until its financial position improves. The directions were stated to remain in force for six months from the close of business on January 10, 2020, subject to review.