Restrictions imposed:
- The bank cannot issue loans or open any fixed deposit accounts until February 2020.
- RBI has imposed the directions under sub-section (1) of Section 35A read with Section 56 of the Banking Regulation Act, 1949.
Section 35A of the Banking Regulation Act:
- The Banking Regulation Act legislated in the year 1949 comprises a set of rules which govern the banking sector in India. The act vests powers in the RBI to grant licenses to banks as well as work as a banking regulator in India.
- Section 35A of the Banking Regulation Act, 1949 vests power in the RBI to give directions to banks and can take action, "to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the banking company".
- The RBI under the act can also impose restrictions on banks to ensure better governance and control.
- Meanwhile, Section 56 of the act is applicable to cooperative societies.
