Case Brief
What Happened
RBI issued directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 against The Karmala Urban Co-operative Bank Ltd., Solapur, effective from the close of business on July 29, 2022. The order restricts the bank from, without prior written approval of RBI, 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 transferring assets except as permitted in the direction. In addition, withdrawals across all depositor accounts were capped at ₹10,000 subject to the conditions specified by RBI. RBI stated that the directions should not be construed as cancellation of banking licence and that the bank will continue to undertake banking business with restrictions until its financial position improves; the directions remain in force for six months and are subject to review.