Case Brief
What Happened
The Reserve Bank of India issued directions to The Bhavani Sahakari Bank Ltd., Mumbai under Section 35A read with Section 56 of the Banking Regulation Act, 1949, effective from the close of business on July 04, 2025. The order curbs several core functions: the bank cannot grant or renew loans and advances, make investments, incur liabilities including borrowings and fresh deposits, make disbursements, or sell/transfer/dispose of assets without prior RBI approval. It also bars withdrawal from savings, current, or other depositor accounts, while allowing only limited set-off of loans against deposits and certain essential expenses. RBI said its recent engagement with the board and senior management did not result in concrete corrective action, prompting the directions to protect depositors and address supervisory concerns. The press release also clarifies that the directions are not a cancellation of the bank's licence and will remain in force for six months from July 04, 2025, subject to review.