Directions under section 35 A read with section 56 of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies) – Shri Sharada Mahila Co-operative Bank Limited, Tumkur, Karnataka

Case Brief

The Reserve Bank of India issued directions to Shri Sharada Mahila Co-operative Bank Limited, Tumkur, Karnataka under Section 35A of the Banking Regulation Act, 1949 read with Section 56 applicable to co-operative societies. Effective from the close of business on July 08, 2022, the bank was restricted from granting or renewing loans and advances, making investments, incurring liabilities including borrowings and acceptance of fresh deposits, disbursing payments, entering into compromise or arrangement, and selling or otherwise disposing of assets without prior written approval from RBI. The directions also limited withdrawals from deposit accounts to ₹7,000 subject to stated conditions. RBI clarified that the directive should not be construed as cancellation of the bank's licence and that the bank may continue banking business under the imposed restrictions, which remain in force for six months from July 08, 2022 and are subject to review.