The RBI has extended regulatory directions under Section 35A and Section 56 of the Banking Regulation Act, 1949, for Sri Guru Raghavendra Sahakara Bank Niyamitha, Bengaluru, citing public interest. The directive remains in force beyond July 10, 2020.
RBI Extends Regulatory Directions to Bengaluru’s Sri Guru Raghavendra Sahakara Bank
The Reserve Bank of India has extended the period of operation of regulatory directions issued under Section 35A read with Section 56 of the Banking Regulation Act, 1949, to Sri Guru Raghavendra Sahakara Bank Niyamitha, Bengaluru. The original directive, issued on January 02, 2020, was set to expire on July 10, 2020, but has now been extended in the public interest.
Under these directions, the bank was subject to operational restrictions including limits on new lending, branch expansions, and appointment of senior personnel. The extension indicates that the regulator remains concerned about the bank's financial health and governance standards.
The Banking Regulation Act empowers the RBI to issue such directions to protect depositors’ interests and maintain financial stability. Section 35A confers special powers on the RBI to supersede boards and impose corrective measures in case of financial deterioration.
Banking lawyers should note that prolonged regulatory supervision often precedes mergers or amalgamations under the RBI’s prompt corrective action (PCA) framework. Affected institutions and stakeholders must prepare for potential restructuring or resolution proceedings.
Citations
- Banking Regulation Act, 1949 §§ 35A, 56
