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

Case Brief

The Reserve Bank of India issued directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 to Lucknow Urban Co-operative Bank Limited, Lucknow (U.P.), effective from the close of business on July 28, 2022. The order restricts the bank from granting or renewing loans and advances, making investments, incurring liabilities including borrowings and fresh deposits, disbursing payments, entering into compromises or arrangements, and disposing of assets except as specifically allowed. It also caps withdrawals at ₹30,000 across all savings, current, or other accounts of a depositor, subject to conditions in the directions. RBI clarified that the action is not a cancellation of banking licence and that the bank will continue banking business with restrictions for six months, subject to review.