Directions under Section 35 A read with Section 56 of the Banking Regulation Act, 1949 – Kanaka Pattana Sahakara Bank Niyamita, Davangere

Case Brief

The Reserve Bank of India issued Directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 to Kanaka Pattana Sahakara Bank Niyamita, Davangere, effective from the close of business on March 12, 2026, for a period of six months subject to review. Under the directive, the bank cannot, without prior RBI approval, 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 specified in the directions. RBI also barred withdrawals from savings bank, current, or other depositor accounts, while allowing limited set-off of loans against deposits and certain essential expenses. RBI stated that it had engaged with the board and senior management previously, but the bank had not taken concrete steps to address supervisory concerns and protect depositors' interests.