Recorded RBI impact
Business restriction
Business restriction · Fresh imposition
Published by RBI
28 Aug 2026
Case Brief
The Reserve Bank of India issued fresh directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 to Ashok Sahakari Bank Ltd., Ahmednagar. RBI said the action was driven by supervisory concerns stemming from recent material developments in the bank and the bank’s failure to take concrete corrective measures despite engagement with its board and senior management. Under the directions, the bank cannot, without prior written RBI approval, grant or renew loans, make investments, incur liabilities including borrowings and acceptance of fresh deposits, disburse payments, enter compromises or arrangements, or sell/transfer/dispose of assets, and it cannot allow withdrawals from depositor accounts except as permitted in the directions. The release states that the bank is not being cancelled and may continue banking business only within the restrictions. The directions are effective from close of business on August 28, 2026 and remain in force for six months, subject to review.
Why RBI Acted
RBI issued directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 to Ashok Sahakari Bank Ltd., Ahmednagar because of supervisory concerns arising from recent material developments in the bank. RBI said it had engaged with the board and senior management, but the bank had not taken concrete steps to address the concerns or protect depositors’ interests. The directions prohibit, without prior RBI approval, grant or renewal of loans and advances, investments, incurring liabilities including borrowal and acceptance of fresh deposits, disbursement of payments, compromise/arrangement, and sale or transfer of assets, and also restrict withdrawal from savings/current/other accounts, subject to stated exceptions. The order is not a cancellation of the banking licence and remains in force for six months from close of business on August 28, 2026, subject to review.
Operating Impact
The bank must operate under tight RBI-imposed controls from August 28, 2026 for six months unless modified earlier. Depositors face withdrawal restrictions, while the bank cannot expand lending, take fresh deposits, or freely use its assets without RBI approval; DICGC coverage up to ₹5 lakh is noted for eligible depositors.
Regulatory Basis
- Section 35 A
- Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Business restriction
- Order Date
- 28 Aug 2026
- Effective From
- 28 Aug 2026
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Bank