Directions under Section 35 A read with section 56 of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies) – Adarsh Mahila Nagari Sahakari Bank Maryadit, Aurangabad

Case Brief

RBI issued directions under Section 35A of the Banking Regulation Act, 1949 read with Section 56 to Adarsh Mahila Nagari Sahakari Bank Maryadit, Aurangabad, vide directive dated February 23, 2023. From the close of business on February 24, 2023, the bank could not, without prior written approval of RBI, grant or renew loans and advances, make investments, incur liabilities including borrowings and fresh deposits, disburse payments, enter into compromises or arrangements, or sell/transfer/dispose of assets except as permitted by the directive. RBI also stated that, considering the bank’s liquidity position, no amount from depositors’ savings, current, or other accounts could be withdrawn, though limited set-off of loans against deposits was allowed under specified conditions. The directions were stated to be in force for six months, subject to review, and RBI clarified that the order was not a cancellation of the bank’s licence.