Recorded RBI impact
Business restriction
Business restriction · Fresh imposition
Published by RBI
16 Dec 2025
Case Brief
RBI issued directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 to Loknete R.D. (Appa) Kshirsagar Sahakari Bank Ltd, Niphad, Tal. Niphad, Dist. Nashik. The order was issued due to material supervisory concerns and to protect depositors. Effective from the close of business on December 16, 2025, the bank cannot, without prior written approval of RBI, grant or renew loans and advances, make investments, incur liabilities including borrowings and acceptance of fresh deposits, disburse payments, or sell/transfer/dispose of assets except as notified. It is also barred from allowing withdrawals from savings, current, or other depositor accounts, though limited set-off against deposits and essential expenses such as salaries, rent, and electricity may still be paid. RBI clarified that the directions do not amount to cancellation of the banking licence and will remain in force for six months, subject to review.
Why RBI Acted
Under Section 35A read with Section 56 of the Banking Regulation Act, 1949, RBI issued directions to Loknete R.D. (Appa) Kshirsagar Sahakari Bank Ltd, Niphad, after citing material supervisory concerns arising from developments in the bank. The directions prohibit the bank, without prior RBI approval, from granting or renewing loans and advances, making investments, incurring liabilities including borrowings and acceptance of fresh deposits, disbursing payments, or dealing with assets except as permitted. RBI also directed that no withdrawal be allowed from savings, current or other depositor accounts, subject to limited set-off and essential expenditure permissions. The release states the directions are to protect depositors' interests and are not a cancellation of licence, and that they remain in force for six months from close of business on December 16, 2025.
Operating Impact
The bank must operate under strict RBI-imposed limits on lending, investment, liabilities, new deposits, payments, and customer withdrawals. Depositors are directly affected because withdrawals are restricted, although limited set-off and essential payments remain permitted; the restrictions apply from the close of business on December 16, 2025 for six months unless modified earlier by RBI.
Regulatory Basis
- Section 35 A
- Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Business restriction
- Order Date
- 15 Dec 2025
- Effective From
- 16 Dec 2025
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank