Directions under Section 35 A read with section 56 of the Banking Regulation Act (As Applicable to Co-operative Societies), 1949 – Nagar Urban Co-operative Bank Ltd., Ahmednagar, Maharashtra

Case Brief

RBI issued fresh directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 (as applicable to co-operative societies) to Nagar Urban Co-operative Bank Ltd., Ahmednagar, Maharashtra, effective from the close of business on December 06, 2021. The bank was barred, without prior RBI approval in writing, from granting or renewing loans and advances, making investments, incurring liabilities including borrowing and accepting fresh deposits, disbursing or agreeing to disburse payments, entering into compromises or arrangements, and selling, transferring or otherwise disposing of properties or assets except as allowed in the direction. Depositors could withdraw only up to ₹10,000 in aggregate across savings, current, or other accounts, subject to the stated conditions. RBI also clarified that the directions did not per se amount to cancellation of the banking licence and that the bank would continue banking business with restrictions for six months, subject to review and possible modification.