Directions under section 35 A read with section 56 of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies) – Sahebrao Deshmukh Co-operative Bank Ltd., Mumbai

Case Brief

RBI issued directions under Section 35A of the Banking Regulation Act, 1949 read with Section 56 to Sahebrao Deshmukh Co-operative Bank Ltd., Mumbai. From the close of business on July 08, 2022, the bank could not, without prior written approval of RBI, grant or renew loans and advances, make investments, incur liabilities including borrowings and fresh deposit acceptance, disburse payments, enter into compromises or arrangements, or sell/transfer/dispose of assets except as allowed in the direction. The release also says a depositor may withdraw up to ₹50,000 across savings/current/other accounts subject to the stated conditions. RBI clarified that these directions do not amount to cancellation of the banking licence and that the bank will continue banking business with restrictions until its financial position improves; the directions were to remain in force for six months and were subject to review.