Case Brief
What Happened
RBI issued directions under Section 35A of the Banking Regulation Act, 1949 read with Section 56 to HCBL Co-operative Bank Ltd., Lucknow, effective from the close of business on February 24, 2023. The directions restrict the bank from granting or renewing loans and advances, making investments, incurring liabilities, accepting fresh deposits, making payments, entering compromise or arrangement, and disposing of properties or assets except as specifically permitted. Owing to the bank's liquidity position, withdrawals from savings, current, or other depositor accounts were not permitted, though set-off of loans against deposits was allowed subject to the conditions in the RBI directions. RBI stated the action is not a cancellation of banking licence and that the bank will continue banking business with restrictions for six months, subject to review.