Case Brief
What Happened
RBI issued directions to Garha Co-operative Bank Ltd., Guna under Section 35A of the Banking Regulation Act, 1949 read with Section 56, effective from the close of business on February 24, 2021. The administrator was barred, without prior written approval of RBI, from granting or renewing loans and advances, making investments, incurring liabilities including borrowings and acceptance of fresh deposits, disbursing payments, entering into compromises or arrangements, and selling or otherwise disposing of assets except as allowed in the RBI direction. The bank’s depositors were subject to a withdrawal cap of ₹50,000 from the total balance across all savings, current, or other accounts, subject to the stated conditions, and set-off of loans against deposits was permitted only under the direction’s conditions. RBI clarified that the order was not a cancellation of banking licence and that the bank would continue banking business with restrictions for six months, subject to review and possible modification.