Case Brief
What Happened
RBI issued directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 to Thodupuzha Urban Co-operative Bank Ltd. No. 394, Kerala. The order restricts the bank from granting or renewing loans and advances, making investments, incurring liabilities, accepting fresh deposits, disbursing payments, and selling or transferring assets except as permitted in the direction. Due to the bank's liquidity position, withdrawals from deposit accounts are also disallowed, though loan set-off against deposits is permitted under stated conditions. RBI stated that the issuance of the directions should not be construed as cancellation of the banking licence, and the bank will continue banking business under restrictions for six months from August 23, 2022, subject to review.