Case Brief
What Happened
RBI issued directions to The Mudhol Co-operative Bank Ltd., Post Mudhol, Bagalkot District, Karnataka under Section 35A of the Banking Regulation Act, 1949 read with Section 56 of the Act (AACS), effective from the close of business on April 08, 2019. The directions restricted the bank from granting or renewing loans and advances, making investments, incurring liabilities including borrowings and acceptance of fresh deposits, disbursing or agreeing to disburse payments, entering into compromises or arrangements, and selling or disposing of assets, except as permitted under the earlier RBI directions dated April 02, 2019. Customers could withdraw only up to ₹1,000 from each savings, current, or other deposit account, subject to the stated conditions. RBI clarified that the directions were not a cancellation of the bank’s licence and that the bank would continue operating with restrictions until its financial position improved.