Directions under Section 35 A read with Section 56 of the Banking Regulation Act, 1949 – Motiram Agrawal Jalna Merchants Co-operative Bank Limited, Jalna

Case Brief

The Reserve Bank of India issued directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 to Motiram Agrawal Jalna Merchants Cooperative Bank Limited, Jalna, effective from the close of business on April 10, 2026. The bank may not, without prior RBI approval, grant or renew loans and advances, make investments, incur liabilities including borrowings and acceptance of fresh deposits, disburse payments, enter into compromises or arrangements, or sell/transfer/dispose of assets except as permitted in the direction. RBI also stated that no amount from depositor savings, current, or other accounts may be withdrawn, subject to specified set-off and essential expenditure exceptions. The directions were imposed because of a shortfall in liquid assets and RBI’s view that the bank had not taken concrete steps to address the liquidity problem or protect depositors. The order remains in force for six months and is subject to review; RBI also clarified that it does not amount to cancellation of the banking licence.