Recorded RBI impact
Business restriction
Business restriction · Fresh imposition
Published by RBI
1 Jun 2012
Case Brief
The Reserve Bank of India issued directions under Section 35A of the Banking Regulation Act, 1949 (AACS) read with Section 56 to three District Central Co-operative Banks: Osmanabad District Central Co-operative Bank Ltd., Jalna District Central Co-operative Bank Ltd., and Dhule and Nandurbar District Central Co-operative Bank Ltd. The directions bar these banks from accepting fresh deposits in any form, including savings, current, fixed, and recurring deposit accounts, but allow renewal of existing deposits in the same name and same capacity. The directions take effect on receipt by the respective banks and continue until further orders. RBI also stated that issuance of the directions should not per se be construed as rejection of the banks' licence applications.
Why RBI Acted
In exercise of powers under Section 35A of the Banking Regulation Act, 1949 (AACS) read with Section 56 of the Act, RBI issued directions to Osmanabad District Central Co-operative Bank Ltd. (Osmanabad), Jalna District Central Co-operative Bank Ltd. (Jalna), and Dhule and Nandurbar District Central Co-operative Bank Ltd. (Dhule). The directions prohibit acceptance of fresh deposits, including SB, current, fixed, recurring and any other deposit accounts, while permitting renewal of existing deposits in the same name and same capacity. The directions were stated to come into force on receipt by the respective banks and remain in force till further orders; RBI also noted that issuance of the directions should not per se be construed as rejection of licence application.
Operating Impact
The three banks cannot take new deposits from customers, which constrains normal banking operations and affects prospective depositors. Existing deposit renewals are still allowed, and the restrictions remain until RBI modifies or withdraws the directions.
Regulatory Basis
- Section 35A of the Banking Regulation Act, 1949 (AACS)
- Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Business restriction
- Order Date
- 9 May 2012
- Effective From
- 9 May 2012
- Entities Affected
- 3
- Entity Role
- Bulk Member
- Entity Type
- Co-operative bank
Related Entities
Entities similar to Jalna District Central Co-operative Bank Ltd., Jalna