Case Brief
What Happened
The Reserve Bank of India stated that R S Co-operative Bank Ltd., Mumbai, Maharashtra, had been placed under directions effective from June 26, 2015 and that the directions had been extended from time to time, most recently by an order dated September 22, 2016, to remain valid until March 25, 2017, subject to review. By directive dated January 31, 2017, RBI partially modified the earlier directions. The key modification allowed the bank to set off loans against deposits only where the loan agreement permitted such appropriation, the account was KYC compliant, third-party deposits were excluded, the depositor had been given due notice/consent in appropriate cases, and the deposit was not otherwise encumbered by court, statutory, trust, or similar restrictions. RBI also clarified that the modification should not be interpreted as indicating substantive improvement in the bank’s financial position.