Case Brief
What Happened
The Reserve Bank of India issued directions under Section 35A of the Banking Regulation Act, 1949 (AACS), read with Section 56, to The Bhuj Mercantile Co-operative Bank Ltd., Ahmedabad, Gujarat. With effect from the close of business on April 02, 2012, the bank could not, without prior written 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 under the directions. RBI also restricted withdrawals from deposit accounts to Rs 10,000 initially, later modifying the directive on May 18, 2012 to allow each depositor to withdraw up to Rs 30,000 in total, subject to set-off against any borrowal liability. The directions were to remain in force for six months from April 02, 2012, subject to review.