Directions under Section 35 A read with section 56 of the Banking Regulation Act (As Applicable to Co-operative Societies), 1949 – Indian Mercantile Cooperative Bank Ltd Lucknow

Case Brief

RBI issued directions to Indian Mercantile Cooperative Bank Ltd, Lucknow under Section 35A read with Section 56 of the Banking Regulation Act, 1949 (as applicable to co-operative societies). The order, effective from the close of business on January 28, 2022, restricts the bank from granting or renewing loans and advances, making investments, incurring liabilities including borrowing and acceptance of fresh deposits, making payments, entering compromises or arrangements, and disposing of assets except as specifically allowed. Depositor withdrawals were limited to ₹100,000 across all accounts, subject to the stated conditions. RBI clarified that the directions do not amount to cancellation of the banking licence; the bank may continue to operate with restrictions for six months, subject to review and possible modification.