Case Brief
What Happened
The Reserve Bank of India issued directions under Section 35A of the Banking Regulation Act, 1949 (read with Section 56) against Pioneer Urban Co-operative Bank Ltd., Lucknow in the public interest. The directions took effect from the close of business on March 24, 2015 and remain in force for six months, subject to review. Under the order, the bank cannot, without prior written approval of RBI, 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 or otherwise dispose of assets. Depositor access is also restricted: withdrawals are capped at Rs 1,000 per savings/current/other deposit account, subject to set-off against any borrower or surety liabilities. The bank may renew existing term deposits on maturity in the same name and capacity, and may incur only permitted expenditure. RBI clarified that the issuance of the directions should not be construed as cancellation of the bank's licence.