RBI extends regulatory directions issued under Section 35A of the Banking Regulation Act, 1949 to Sri Guru Raghavendra Sahakara Bank, Bengaluru.
RBI Extends Directions to Karnataka Co-operative Bank
The Reserve Bank of India has extended the period 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 for six months and was extended based on public interest considerations.
Section 35A empowers the RBI to issue directions to banking companies to prevent deterioration in financial condition or to protect depositors' interests. The extension indicates persistent supervisory concerns, possibly relating to capital adequacy, asset quality, or governance issues.
Such actions are not uncommon for urban cooperative banks facing financial stress. The extension allows the regulator to monitor compliance, restrict certain operations, and implement corrective measures. Practitioners should note that enforcement under Section 35A is administrative and typically precedes more drastic measures like amalgamation or liquidation.
Citations
- Banking Regulation Act, 1949, Section 35A, Section 56
