Case Brief
What Happened
RBI issued directions to Jaiprakash Narayan Nagari Sahakari Bank Ltd., Basmatnagar under Section 35A read with Section 56 of the Banking Regulation Act, 1949. The order restricts the bank from granting or renewing loans and advances, making investments, incurring liabilities, accepting fresh deposits, disbursing payments, entering into compromises or arrangements, and selling or transferring assets without prior RBI approval except as specifically permitted. Due to the bank’s liquidity position, deposit withdrawals from savings, current, and other accounts are also effectively prohibited, though loan set-off against deposits is allowed under the stated conditions. RBI clarified that this is not a cancellation of banking licence and that the bank may continue banking business under restrictions, with the directions valid for six months from the close of business on July 29, 2022.