Case Brief
What Happened
The Reserve Bank of India, acting under Section 35A of the Banking Regulation Act, 1949 (read with Section 56 for co-operative societies), issued directions to Indian Mercantile Co-operative Bank Ltd., Lucknow. From the close of business on June 12, 2014, the bank was restricted from granting or renewing loans and advances, making investments, incurring liabilities including borrowings and fresh deposits, making payments, entering compromises or arrangements, and disposing of assets except as expressly allowed. Depositors were permitted to withdraw only up to Rs 1,000 per account, subject to adjustment of dues, and existing term deposits could be renewed on maturity in the same name and capacity. RBI indicated that the directions would remain in force until further notice, while clarifying that the order should not be construed as cancellation of the bank’s licence.