Case Brief
What Happened
The Reserve Bank of India issued directions to Shree Mahalaxmi Urban Co-operative Credit Bank Ltd., Gokak under Section 35A read with Section 56 of the Banking Regulation Act, 1949. Effective from the close of business on September 27, 2024, the bank cannot, without prior RBI approval, grant or renew loans and advances, make investments, incur liabilities, accept fresh deposits, disburse payments, enter compromises or arrangements, or dispose of assets except as specifically permitted. The bank has also been directed not to allow withdrawals from savings, current, or other depositor accounts, though set-off of loans against deposits is allowed under the stated conditions and certain essential expenses may continue. RBI said the directions were prompted by supervisory concerns arising from recent adverse material developments and were intended to protect depositors. The directions are to remain in force for six months from the close of business on September 27, 2024, subject to review. RBI clarified that the order does not by itself mean cancellation of the bank's licence.