Case Brief
What Happened
The Reserve Bank of India issued Directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 to The Mahabhairab Co-operative Urban Bank Ltd., Tezpur. Effective from the close of business on October 12, 2023, the bank could not, without prior written RBI approval, grant or renew loans and advances, make investments, incur liabilities including borrowals and fresh deposits, disburse payments, enter into compromises or arrangements, or sell/transfer/dispose of assets except as permitted in the Directions. In view of the bank’s liquidity position, withdrawals from depositor accounts were also not permitted, though set-off of loans against deposits was allowed subject to the stated conditions. RBI clarified that the order was not a cancellation of the banking licence and would remain in force for six months subject to review.