Directions under Section 35 A read with Section 56 of the Banking Regulation Act, 1949 – The Baghat Urban Co-operative Bank Ltd., Solan

Case Brief

RBI issued fresh Directions to The Baghat Urban Co-operative Bank Ltd., Solan under Section 35A read with Section 56 of the Banking Regulation Act, 1949, effective from the close of business on October 8, 2025. The bank may not, without prior RBI approval, grant or renew loans and advances, make investments, incur liabilities, accept fresh deposits, disburse payments, enter into compromises or arrangements, or sell/transfer/dispose of assets except as permitted in the Directions. RBI cited lack of concrete efforts by the bank to address supervisory concerns and protect depositor interests after engagement with the board and senior management. Withdrawals are capped at ₹10,000 per depositor account, though set-off of loans against deposits is allowed subject to conditions, and the bank may incur only essential expenses. RBI clarified that the order is not a cancellation of the banking licence and remains in force for six months, subject to review.