Directions under Section 35 A read with section 56 of the Banking Regulation Act, 1949 – “Loknete R.D. (Appa) Kshirsagar Sahakari Bank Ltd, Niphad, Tal. Niphad, Dist. Nashik”

Case Brief

RBI issued directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 to Loknete R.D. (Appa) Kshirsagar Sahakari Bank Ltd, Niphad, Tal. Niphad, Dist. Nashik. The order was issued due to material supervisory concerns and to protect depositors. Effective from the close of business on December 16, 2025, the bank cannot, without prior written approval of RBI, grant or renew loans and advances, make investments, incur liabilities including borrowings and acceptance of fresh deposits, disburse payments, or sell/transfer/dispose of assets except as notified. It is also barred from allowing withdrawals from savings, current, or other depositor accounts, though limited set-off against deposits and essential expenses such as salaries, rent, and electricity may still be paid. RBI clarified that the directions do not amount to cancellation of the banking licence and will remain in force for six months, subject to review.