Directions under Section 35A of the Banking Regulation Act, 1949 (AACS) – Kapol Co-operative Bank Ltd., Mumbai, Maharashtra- Extension of period
Case Brief
The Reserve Bank of India extended the Section 35A directions already imposed on Kapol Co-operative Bank Ltd., Mumbai, Maharashtra. The original directive dated March 30, 2017 was stated to continue to apply for a further period of six months, until March 31, 2018, under Section 35A read with Section 56 of the Banking Regulation Act, 1949. RBI clarified that the extension or modification should not be taken to mean it was satisfied with the bank's financial improvement.
The bank had already been placed under directions vide directive dated March 30, 2017. RBI, exercising powers under Section 35A read with Section 56 of the Banking Regulation Act, 1949, stated that the directive shall continue to apply for a further period of six months till March 31, 2018, subject to review. The release also notes that the extension should not be construed as RBI being satisfied with any substantive improvement in the bank's financial position.
Severity Assessment
This is an extension of Section 35A directions on a co-operative bank, which is a broad operational restriction and is treated as severity 4.
Kapol Co-operative Bank remains subject to RBI directions and must continue operating within the imposed restrictions through March 31, 2018, unless further modified or reviewed. Depositors and other stakeholders remain affected by the ongoing regulatory constraint.
Published as Kapol Co-operative Bank Ltd.
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