Case Brief
What Happened
RBI issued Directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 to Colour Merchants Co-operative Bank Ltd., Ahmedabad, effective from the close of business on September 25, 2023. The bank was barred, without prior RBI approval in writing, from granting or renewing loans and advances, making investments, incurring liabilities including borrowings and acceptance of fresh deposits, disbursing payments, entering into compromises/arrangements, and selling or disposing of assets except as specifically permitted. Depositor withdrawals were capped at ₹50,000 across all accounts, subject to the conditions in the Direction. RBI clarified that the order is not a cancellation of banking licence and that the bank may continue banking business under restrictions for six months, subject to review.