Case Brief
What Happened
The Reserve Bank of India extended by six months the directions already in force against The Panihati Co-operative Bank Ltd., Panihati, Kolkata, taking the effective period through 23 April 2015, subject to review. The order was originally issued on 24 April 2014 because of the bank’s very precarious financial position. The directions, issued under Section 35A of the Banking Regulation Act, 1949 read with Section 56, restrict the bank from undertaking several activities without prior written RBI approval, including lending, investments, incurring liabilities, accepting fresh deposits, making payments, and disposing of assets. Depositors are allowed to withdraw only up to Rs 1,000 per account, subject to conditions in the directions. The RBI also clarified that the order should not be construed as cancellation of the banking licence, and that the bank would continue to undertake banking business with restrictions until its financial position improves.