Recorded RBI impact
Extension
Business restriction · Extension
Published by RBI
31 Dec 2020
Case Brief
The Reserve Bank of India extended the validity of its existing directions issued to Vasantdada Nagari Sahakari Bank Ltd., Dist. Osmanabad, Maharashtra under Section 35A read with Section 56 of the Banking Regulation Act, 1949 (AACS). The directions, first issued from the close of business on November 13, 2017 and modified from time to time, were previously valid up to December 31, 2020 and are now continued from January 1, 2021 to March 31, 2021, subject to review. The directions include restrictions and/or ceilings on withdrawal and acceptance of deposits. RBI also clarified that the directions should not be construed as cancellation of banking licence, and that the bank may continue banking business with restrictions until its financial position improves.
Why RBI Acted
In the public interest, RBI had originally issued directions to Vasantdada Nagari Sahakari Bank Ltd., Dist. Osmanabad, Maharashtra under Section 35A read with Section 56 of the Banking Regulation Act, 1949 (AACS) from the close of business on November 13, 2017. Those directions had been modified from time to time and were last extended up to December 31, 2020. The present release extends the same directions for a further three months, from January 1, 2021 to March 31, 2021, subject to review. The directions stipulate restrictions and/or ceilings on withdrawal and acceptance of deposits. RBI notes that the directions do not per se mean cancellation of the banking licence, and the bank will continue banking business with restrictions until its financial position improves.
Operating Impact
The bank must continue operating under RBI-imposed limits on withdrawals and deposit acceptance through March 31, 2021, unless modified earlier. Depositors and customers remain affected by the ceilings/restrictions, and the bank’s normal operations continue only within those constraints and subject to review.
Regulatory Basis
- Section 35 A read with Section 56 of the Banking Regulation Act, 1949 (AACS)
- sub-section (1) of Section 35 A read with Section 56 of the Banking Regulation Act, 1949 (AACS)
Action Facts
- Primary Impact
- Extension
- Effective From
- 1 Jan 2021
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank