Case Brief
What Happened
RBI, acting under Section 35A of the Banking Regulation Act, 1949 read with Section 56, issued directions to Sawantwadi Urban Co-operative Bank Ltd., Sawantwadi vide directive dated June 13, 2023. Effective from the close of business on June 14, 2023, the bank was prohibited from undertaking several activities without prior written approval, including granting or renewing loans and advances, making investments, incurring liabilities such as borrowings or acceptance of fresh deposits, disbursing payments, entering into compromises/arrangements, and selling or transferring assets except as specified in the directions. Owing to the bank’s liquidity position, withdrawals from depositor accounts were restricted, though loan set-off against deposits was allowed subject to conditions. RBI clarified that the directions did not amount to cancellation of the banking licence and that the bank would continue to conduct business under restrictions for six months, subject to review and possible modification.