Case Brief
What Happened
RBI issued directions to Shankarrao Pujari Nutan Nagari Sahakari Bank Limited, Ichalkaranji, Kolhapur under Section 35A of the Banking Regulation Act, 1949 read with Section 56 applicable to co-operative societies. The directions, effective from the close of business on May 13, 2022, restrict the bank from undertaking several core banking activities without prior RBI approval, including granting or renewing loans and advances, making investments, incurring liabilities, accepting fresh deposits, disbursing payments, entering into compromises or arrangements, and selling or otherwise disposing of assets except as permitted. Because of the bank's liquidity position, deposit withdrawals from savings, current, or other accounts were also barred, though loan set-off against deposits was allowed under specified conditions. RBI clarified that the directions do not amount to cancellation of the banking licence and stated they would remain in force for six months, subject to review and possible modification.