The Bhimavaram Co-operative Urban Bank Ltd., Bhimavaram

In the interest of the public, RBI exercised powers under Section 35A of the Banking Regulation Act, 1949 (read with Section 56 for co-operative societies) to direct The Bhimavaram Co-operative Urban Bank Ltd., Bhimavaram, Andhra Pradesh. From the close of business on March 28, 2019, the bank could not, without prior RBI approval, grant or renew loans and advances, make investments, incur liabilities including borrowings and acceptance of fresh deposits, disburse payments, enter into compromise/arrangement, or sell/transfer/dispose of assets, except as specifically permitted. Depositors were allowed to withdraw up to ₹1,000 from each savings/current/other deposit account, existing term deposits could be renewed on maturity, and certain expenditure and Government/SLR-approved investments were permitted. RBI stated the directions would remain in force for six months and that the issuance should not per se be construed as cancellation of the banking licence.

The bank must operate under RBI-imposed restrictions until the directions expire, are modified, or are reviewed. Depositors can withdraw only up to the stated cap per account, while the bank cannot freely lend, take fresh deposits, or assume new liabilities without approval. Borrowers, sureties, and other counterparties are also affected because account balances may be adjusted against dues and the bank’s operational flexibility is materially constrained from March 28, 2019 onward.