Case Brief
What Happened
The Reserve Bank of India issued directions to The Valsad Mahila Nagrik Sahakari Bank Ltd., Valsad, Gujarat, under Section 35A read with Section 56 of the Banking Regulation Act, 1949. From the close of business on December 18, 2025, the bank cannot, without prior RBI approval, grant or renew loans and advances, make investments, incur liabilities including borrowings and fresh deposits, disburse payments, enter compromises or arrangements, or sell/transfer/dispose of assets except as permitted in the direction. RBI also prohibited withdrawal from savings, current, and other depositor accounts, while allowing limited set-off of loans against deposits and essential operational expenses such as salaries, rent, and electricity. The action was taken due to supervisory concerns, recent material developments in the bank, and the bank's failure to take concrete steps to address those concerns and protect depositors. RBI stated the directions do not amount to cancellation of the bank's licence and will remain in force for six months, subject to review.