Recorded RBI impact
Business restriction
Business restriction · Fresh imposition
Published by RBI
11 Mar 2026
Case Brief
RBI issued fresh Directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 (AACS) against The Gujarat Rajya Karmachari Co-op. Bank Ltd., Ahmedabad, Gujarat. The bank was restricted from granting or renewing loans and advances, making investments, incurring liabilities, accepting fresh deposits, disbursing payments, and dealing with assets except as permitted; it was also directed not to allow withdrawal from depositor accounts, subject to limited set-off and essential operating expenses. RBI stated that it had engaged with the bank's Board and Senior Management earlier, but the bank had not taken concrete efforts to address supervisory concerns and protect depositor interests. The Directions are in force for six months from the close of business on March 11, 2026, and are subject to review. RBI clarified that this is not a cancellation of the banking licence and that the bank may continue banking business only within the specified restrictions.
Why RBI Acted
Acting under Section 35A read with Section 56 of the Banking Regulation Act, 1949 (AACS), RBI issued Directions to The Gujarat Rajya Karmachari Co-op. Bank Ltd., Ahmedabad. The bank may 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 compromises or sell/transfer assets except as permitted in the Directions. RBI also barred withdrawals from savings, current, or any other depositor account, while permitting only limited set-off of loans against deposits and essential expenditures. RBI said the action followed inadequate steps by the bank to address supervisory concerns and protect depositors, and the Directions are to remain in force for six months from close of business on March 11, 2026, subject to review.
Operating Impact
The bank must operate under RBI-prescribed constraints for six months from March 11, 2026, unless modified earlier. Depositors face withdrawal restrictions, while the bank cannot expand lending, investments, liabilities, or accept fresh deposits without prior approval; only limited essential expenses and permitted set-offs are allowed.
Regulatory Basis
- Section 35A read with Section 56 of the Banking Regulation Act, 1949 (AACS)
- DICGC Act, 1961
Action Facts
- Primary Impact
- Business restriction
- Order Date
- 11 Mar 2026
- Effective From
- 11 Mar 2026
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank