Directions under Section 35 A read with section 56 of the Banking Regulation Act, 1949 – Irinjalakuda Town Co-operative Bank Ltd

Case Brief

RBI issued fresh directions to Irinjalakuda Town Co-operative Bank Ltd under Section 35A read with Section 56 of the Banking Regulation Act, 1949, effective from the close of business on July 30, 2025. The bank is barred from granting or renewing loans or advances, making investments, incurring liabilities including fresh deposits and borrowings, disbursing payments, entering into compromises or arrangements, and selling or transferring assets except as allowed in the directions. Depositors may withdraw up to ₹10,000 from savings, current, or other accounts, and the bank may make only specified essential expenditures. RBI said the action was taken because supervisory concerns had not been adequately addressed and capital funds had not been infused to maintain minimum regulatory capital. The directions will remain in force for six months and are subject to review; RBI also clarified that this is not a cancellation of the banking licence.