Order of Moratorium on the South Gujarat Local Area Bank Ltd, Navsari, Gujarat

Case Brief

The Reserve Bank of India flagged the performance and financial position of South Gujarat Local Area Bank Ltd., Navsari, Gujarat, as a regulatory and supervisory concern. Acting on RBI’s recommendation, the Government of India issued an Order of Moratorium under Section 45(2) of the Banking Regulation Act, 1949. The moratorium runs from the close of business on November 13, 2003 up to and inclusive of February 12, 2004. During this period, the bank is allowed to make only those payments specifically permitted under the moratorium order. The action was taken in the public interest and in the interest of depositors and the banking system.