The Reserve Bank of India has issued supervisory directions to Sri Mahatma Basaveshwar Co-operative Bank Ltd. in Afzalpur, effective October 8, 2026, under Section 35A of the Banking Regulation Act. The bank is prohibited from granting new loans, accepting deposits, or disposing assets without prior RBI approval. Deposit withdrawals are frozen except for loan-deposit setoffs. The bank may cover essential operating expenses. The restrictions follow RBI's unsuccessful engagement with management over supervisory deficiencies. Eligible depositors are protected under deposit insurance up to ₹5 lakh through DICGC. The directions remain in force for six months, subject to review based on the bank's financial recovery.
Why it matters
Compliance officers should monitor this enforcement action as it illustrates RBI's prudential intervention framework and depositor protection mechanisms. The case demonstrates escalating supervisory responses to persistent operational deficiencies at regulated institutions. Understanding these restrictions is essential for banks managing liquidity risks and regulatory capital adequacy.