Directions under Section 35 A of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies) – Independence Co-operative Bank Limited, Nashik

Case Brief

RBI issued directions under Section 35A of the Banking Regulation Act, 1949 read with Section 56 to Independence Co-operative Bank Limited, Nashik. Effective from the close of business on February 10, 2021, the bank was prohibited from undertaking several activities without prior written approval, including granting or renewing loans and advances, making investments, incurring liabilities such as borrowings and acceptance of fresh deposits, disbursing payments, entering compromises or arrangements, and selling or transferring assets except as specifically allowed. Because of the bank's liquidity position, withdrawals from savings/current/other depositor accounts were restricted, though set-off of loans against deposits was allowed subject to RBI's conditions. RBI stated the directions were not a cancellation of banking licence, that the bank would continue banking business with restrictions, and that the directions would remain in force for six months from the close of business on February 10, 2021, subject to review.