Recorded RBI impact
Business restriction
Business restriction · Fresh imposition
Published by RBI
23 Sept 2014
Case Brief
Effective close of business on September 12, 2014, the Reserve Bank of India issued Directions to Shree Chhatrapati Urban Co.op Bank Ltd., Pimple Nilakh, District Pune (Maharashtra), under Section 35A of the Banking Regulation Act, 1949 read with Section 56. The bank was permitted to allow depositors to withdraw only Rs 1,000 from each savings, current, or other deposit account. It was also restrained from granting or renewing loans and advances, making investments, incurring liabilities, accepting fresh deposits, disbursing payments, entering into compromises or arrangements, and selling/transferring/disposing of assets except as specifically notified in the RBI directions dated September 10, 2014 or with prior written approval from RBI. RBI stated that these directions should not be construed as cancellation of the bank's licence and that the bank would continue to operate with restrictions until its financial position improved.
Why RBI Acted
The Reserve Bank of India issued directions to Shree Chhatrapati Urban Co.op Bank Ltd., Pimple Nilakh, District Pune, under Section 35A of the Banking Regulation Act, 1949 (as applicable to co-operative societies) read with Section 56. The directions restricted depositor withdrawals to Rs 1,000 per savings/current/other deposit account and restrained the bank from granting or renewing loans and advances, making investments, incurring liabilities, accepting fresh deposits, disbursing payments, entering compromises or arrangements, and selling/transferring/disposing of properties or assets except as notified in the RBI directions dated September 10, 2014 or with prior written RBI approval. RBI clarified that the directions were not to be construed as cancellation of the banking licence and that the bank would continue to undertake banking business with restrictions until its financial position improved.
Operating Impact
The bank must operate under strict RBI-imposed limits from September 12, 2014 onward, including a Rs 1,000 withdrawal cap per deposit account and prior RBI approval for specified activities. Depositors, borrowers, and counterparties are directly affected because ordinary withdrawals, lending, deposits, and asset/liability actions are curtailed.
Regulatory Basis
- Section 35A of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies) read with Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Business restriction
- Order Date
- 10 Sept 2014
- Effective From
- 12 Sept 2014
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank