RBI extends action period on Mantha Urban Cooperative Bank

Case Brief

The Reserve Bank of India issued Directions under Section 35A of the Banking Regulation Act, 1949 read with Section 56 to Mantha Urban Cooperative Bank Ltd., Mantha, District Jalna, Maharashtra. Effective from the close of business on November 17, 2020, the bank could not, without prior written RBI approval, grant or renew loans and advances, make investments, incur liabilities including borrowings and acceptance of fresh deposits, disburse or agree to disburse payments, enter into compromises or arrangements, or sell/transfer/dispose of its properties or assets, except as already covered in the earlier directions dated November 13, 2020. The release specifically notes that deposit withdrawals were also subject to the stated conditions. RBI clarified that these directions should not be construed as cancellation of the bank’s licence and that the bank would continue banking business with restrictions until its financial position improved. The directions were to remain in force for six months from the close of business on November 17, 2020, subject to review.