Case Brief
RBI issued fresh directions to The Karwar Urban Co-operative Bank Ltd., Karwar under Section 35A read with Section 56 of the Banking Regulation Act, 1949, effective from the close of business on June 12, 2024. Under these directions, the bank cannot grant or renew loans and advances, make investments, incur liabilities including fresh deposits, disburse payments, or sell/transfer/dispose of assets without prior written approval of RBI. It has also been directed not to allow withdrawal from savings, current, or other depositor accounts, though set-off of loans against deposits is permitted subject to conditions and certain essential expenditures may still be incurred. RBI said the action was due to material supervisory concerns including understatement of public deposits, overstatement of assets, incorrect liquidity reporting, inadequate liquidity to repay depositors, and lack of statutory audit since 2022-23. RBI noted the directions do not per se mean cancellation of the banking licence and will remain in force for six months from June 12, 2024, subject to review.
Action Snapshot
- Primary Impact
- Business restriction
- Entity Type
- Co-operative bank
- Location