Directions under Section 35 A read with Section 56 of the Banking Regulation Act, 1949 – The Citizens Co-operative Bank Ltd., Jammu

Case Brief

The Reserve Bank of India issued directions to The Citizens Co-operative Bank Ltd., Jammu under Section 35A read with Section 56 of the Banking Regulation Act, 1949, effective from the close of business on August 27, 2026. The bank is barred, without prior written RBI approval, from granting or renewing loans and advances, making investments, incurring liabilities, accepting fresh deposits, disbursing payments, entering compromises or arrangements, and selling or transferring assets except as permitted in the directive. Depositor withdrawals are allowed only up to Rs 1,25,000 per account holder subject to the conditions in the directions, and only certain essential expenditures may be incurred. RBI said the action followed supervisory concerns and the bank's failure to take concrete steps to improve functioning and protect depositor interests. The directions remain in force for six months, subject to review, and RBI noted this is not a cancellation of the banking licence.