Benares State Bank Ltd

On January 22, 2002, the Government of India, on the recommendation of the Reserve Bank of India, ordered a moratorium under Section 45(2) of the Banking Regulation Act, 1949, for Benares State Bank Ltd. The moratorium remained in force up to and inclusive of April 21, 2002. During the moratorium, the bank could make only the payments specifically permitted in the order. The release also recalls prior RBI directions effective September 25, 2001, which prohibited the bank from incurring fresh liabilities and capped withdrawal from deposit accounts at Rs.1,000, later enhanced to Rs.2,500 from October 13, 2001. The moratorium was stated to be in the public interest, and in the interest of depositors and the banking system.

For the moratorium period, Benares State Bank Ltd. could only make payments expressly permitted by the order, severely restricting normal banking operations. Depositors and counterparties were affected by the suspension of ordinary payment and withdrawal access, subject to the limited exceptions in the order. The prior withdrawal caps and restrictions on fresh liabilities remained part of the background context leading to the moratorium.