Case Brief
What Happened
RBI issued directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 to Defence Accounts Co-operative Bank Ltd., Pune, effective from the close of business on March 10, 2023. The order restricts the bank from undertaking several core banking activities without prior written RBI approval, including granting or renewing loans and advances, making investments, incurring liabilities such as borrowings and fresh deposits, disbursing payments, entering compromises or arrangements, and disposing of assets except as permitted in the direction. The release clarifies that the order does not amount to cancellation of the banking licence and that the bank may continue to conduct banking business subject to restrictions. It also notes a limited withdrawal facility up to ₹30,000 across all accounts per depositor, subject to conditions, and refers eligible depositors to DICGC insurance claims up to ₹5,00,000. The directions were to remain in force for six months from the close of business on March 10, 2023, subject to review.