Case Brief
What Happened
The Reserve Bank of India issued directions to HCBL Co-operative Bank Ltd., Lucknow under Section 35A of the Banking Regulation Act, 1949 (read with Section 56), stating that the directions were necessary in public interest. The order takes effect from the close of business on April 16, 2015, and remains in force for six months subject to review. During this period, the bank cannot, without prior written approval of RBI, grant or renew loans and advances, make investments, incur liabilities including borrowing and acceptance of fresh deposits, disburse or agree to disburse payments, enter into compromises or arrangements, or sell/transfer/dispose of any property or assets. Withdrawals/payments to depositors are capped at ₹1 lakh per account, subject to adjustment against any borrower or surety liability. Existing term deposits may be renewed on maturity in the same name and capacity. RBI also clarified that the directions should not be construed as cancellation of the bank’s licence.