Directions under Section 35 A read with section 56 of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies) – Nashik Zilla Girna Sahakari Bank Limited, Nashik

Case Brief

RBI issued Directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 to Nashik Zilla Girna Sahakari Bank Limited, Nashik. Effective from the close of business on July 18, 2022, the bank was prohibited from granting or renewing loans and advances, making investments, incurring liabilities including borrowings and fresh deposits, disbursing payments, entering into compromises or arrangements, or selling/transferring assets except as specified in the direction. The release further says that, due to the bank's liquidity position, no amount from savings, current, or other depositor accounts may be withdrawn, though loans may be set off against deposits under the stated conditions. RBI clarified that this is not a cancellation of banking licence and that the bank may continue business with restrictions for six months, subject to review.