Case Brief
What Happened
RBI issued directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 to New India Co-operative Bank Limited, Mumbai. The order was prompted by supervisory concerns arising from recent material developments in the bank and was issued to safeguard the interests of depositors. The bank cannot, without prior RBI approval, grant or renew loans, make investments, incur liabilities including borrowings and fresh deposits, disburse payments, enter into compromises or arrangements, or dispose of assets except as allowed in the directions. It has also been barred from allowing withdrawals from savings, current, or other depositor accounts, subject to limited permitted exceptions such as set-off of loans against deposits and essential expenditure like salaries, rent, and electricity. RBI clarified that the directions do not per se amount to cancellation of the bank's licence and stated they will remain effective for six months from February 13, 2025, subject to review.