Recorded RBI impact
Extension
Business restriction · Extension
Published by RBI
28 Oct 2014
Case Brief
RBI has extended the existing directions on Baranagar Co-operative Bank Ltd., Baranagar, Kolkata, West Bengal, for another three months from October 30, 2014 to January 29, 2015, subject to review. The bank had originally been placed under directions on July 30, 2013 due to its very precarious financial position, and the order had already been extended twice. Under the directions, 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 into compromises or arrangements, or sell/transfer/dispose of assets except as permitted. Depositors are allowed to withdraw only up to Rs 1,000 from each savings bank, current account, or other deposit account, subject to conditions.
Why RBI Acted
The Reserve Bank of India extended the directions earlier issued to Baranagar Co-operative Bank Ltd., Baranagar, Kolkata, West Bengal. These directions, first imposed on July 30, 2013 and already extended twice, will continue from October 30, 2014 to January 29, 2015, subject to review. The bank is restricted from granting or renewing loans and advances, making investments, incurring liabilities including fresh deposits, disbursing payments, entering into compromises or arrangements, or disposing of assets except as permitted. Depositors may withdraw only up to Rs 1,000 from each savings/current/other deposit account, subject to conditions. The directions were issued under Section 35A of the Banking Regulation Act, 1949 read with Section 56, due to the bank's very precarious financial position.
Operating Impact
The bank must continue operating under RBI-imposed restrictions until January 29, 2015 unless modified earlier. Its lending, investment, liability creation, deposit acceptance, payment, and asset-disposal activities remain constrained, and depositors face a withdrawal cap of Rs 1,000 per account subject to conditions.
Regulatory Basis
- Section 35A(1) of the Banking Regulation Act, 1949 read with Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Extension
- Order Date
- 30 Jul 2014
- Effective From
- 30 Oct 2014
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank