Case Brief
What Happened
RBI issued directions to National Mercantile Co-operative Bank Ltd., Lucknow under Section 35A read with Section 56 of the Banking Regulation Act, 1949, effective from close of business on March 10, 2023. The directions restrict the bank from granting or renewing loans and advances, making investments, incurring liabilities including borrowings and acceptance of fresh deposits, disbursing payments, entering into compromises or arrangements, and selling or transferring assets without prior written approval of RBI, except to the extent permitted in the order. Depositors may withdraw up to ₹30,000 from the total balance across their accounts, subject to the conditions in the direction. RBI also stated that the order should not be construed as cancellation of the bank’s licence and that the bank will continue banking business with restrictions for six months, subject to review.