Case Brief
What Happened
The Reserve Bank of India issued Directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 to Urban Co-operative Bank Limited, Sitapur. Effective from the close of business on July 28, 2022, the bank cannot grant or renew loans and advances, make investments, incur liabilities including borrowings and acceptance of fresh deposits, disburse payments, enter compromises or arrangements, or dispose of assets without prior RBI approval, except as specifically allowed in the direction. Depositor withdrawals were also restricted, with a ceiling of ₹50,000 subject to the stated conditions. RBI clarified that the directions are not, by themselves, a cancellation of banking licence and that the bank will continue to operate with restrictions for six months, subject to review.