Case Brief
What Happened
The Reserve Bank of India issued Directions to The Faiz Mercantile Cooperative Bank Ltd., Nasik under Section 35A of the Banking Regulation Act, 1949 read with Section 56 applicable to co-operative societies. Effective from the close of business on March 03, 2023, the bank cannot, without prior written RBI approval, grant or renew loans and advances, make investments, incur liabilities including borrowings and fresh deposits, disburse payments, enter compromises/arrangements, or sell/transfer/dispose of assets except as permitted in the directive. The order also limits withdrawals to ₹2,000 per depositor across accounts, while noting that eligible depositors may claim deposit insurance up to ₹5,00,000 from DICGC. RBI says the directions are not a cancellation of the banking licence and will remain in force for six months, subject to review.