RBI has issued regulatory Directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949, to Sri Mahatma Basaveshwar Co-operative Bank Ltd. and The Tiruvalla Urban Co-operative Bank Ltd., effective October 8, 2026. The public is advised to take note of restrictions, if any, imposed under these Directions.
RBI Issues Supervisory Directions to Two Co-operative Banks
On October 7, 2026, the Reserve Bank of India (RBI) issued Directions under subsection (1) of Section 35A read with Section 56 of the Banking Regulation Act, 1949, to two urban co-operative banks — Sri Mahatma Basaveshwar Co-operative Bank Ltd., Afzalpur, and The Tiruvalla Urban Co-operative Bank Ltd., Pathanamthitta. The Directions became effective from the close of business on October 8, 2026.
While the exact nature of the Directions is not detailed in the public notice, such actions typically include restrictions on lending, branch expansion, or depositor withdrawals, depending on the bank’s financial condition or governance deficiencies. Section 35A empowers the RBI to issue binding directions to banks to prevent deterioration of financial health or protect depositors’ interests.
These developments highlight the increasing use of proactive supervisory tools by the RBI, particularly in the co-operative banking sector, which has faced structural vulnerabilities. Legal practitioners advising banks should monitor RBI communications closely and ensure prompt compliance. Deposit recovery and risk advisory work may see increased demand if restrictions affect customer access.
Citations
- Banking Regulation Act, 1949, Sections 35A(1), 56