Recorded RBI impact
Business restriction
Business restriction · Fresh imposition
Published by RBI
9 Aug 2004
Case Brief
RBI issued directions under Section 35A of the Banking Regulation Act, 1949 (AACS) to The South Indian Co-operative Bank Ltd., Mumbai, in public interest. The order restricts the bank from granting or renewing loans and advances, making investments, incurring liabilities including borrowings and fresh deposits, disbursing payments, entering into compromises or arrangements, and selling or transferring assets without prior written approval from RBI. Depositors may withdraw only up to Rs. 1,000 from each savings, current, or other deposit account, and existing term deposits may be renewed on maturity in the same name and capacity. The release indicates that any relaxation would be considered on review.
Why RBI Acted
The Reserve Bank of India issued directions under Section 35A of the Banking Regulation Act, 1949 (AACS) to The South Indian Co-operative Bank Ltd., Mumbai, in public interest. The directions prohibit the bank, as of the close of business on August 9, 2004, from granting or renewing loans and advances, making investments, incurring liabilities including borrowings and acceptance of fresh deposits, disbursing payments, entering into compromises or arrangements, and selling/transferring/disposal of properties or assets without prior written RBI approval. Depositor withdrawals are capped at Rs. 1,000 per savings/current/other deposit account, and renewal of existing term deposits on maturity in the same name and capacity is permitted. The release states that relaxation of the directive will be considered on review.
Operating Impact
The bank must operate under RBI-imposed controls until further review, limiting core banking activity and access to funds. Customers are affected by withdrawal caps, while lending, deposit-taking, and other transactional activities require RBI approval or are otherwise blocked.
Regulatory Basis
- Section 35A of the Banking Regulations Act, 1949 (AACS)
Action Facts
- Primary Impact
- Business restriction
- Effective From
- 9 Aug 2004
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank