Case Brief
What Happened
RBI issued directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 to Ajantha Urban Co-operative Bank Maryadit, Aurangabad. Effective from the close of business on August 29, 2023, the bank was restricted from granting or renewing loans and advances, making investments, incurring liabilities including borrowings and fresh deposit acceptance, disbursing payments, entering into compromises or arrangements, and disposing of assets without prior written approval of RBI, except as otherwise notified. Due to the bank's liquidity position, withdrawals from deposit accounts were also constrained, though set-off of loans against deposits was permitted subject to the stated conditions. The directions were stated to remain in force for six months and are subject to review, and RBI clarified that this should not be construed as cancellation of the banking licence.