Case Brief
What Happened
The Reserve Bank of India issued fresh Directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 (as applicable to co-operative societies) to Nagar Sahakari Bank Ltd., Etawah. Effective from the close of business on May 18, 2026, the bank is barred from undertaking core activities such as granting or renewing loans and advances, making investments, incurring liabilities including borrowings and fresh deposits, making payments, entering into compromises or arrangements, and selling or transferring assets, except as specifically allowed in the RBI directions. RBI also limited withdrawals to ₹10,000 per depositor account, subject to conditions, while permitting certain essential expenses and set-off of loans against deposits under the stated terms. The action was taken because of supervisory concerns, recent material developments at the bank, and the bank’s lack of concrete efforts to address those concerns and protect depositors. RBI stated the directions are valid for six months and are subject to review; it also clarified that this is not a cancellation of banking licence.