Directions under Section 35 A read with Section 56 of the Banking Regulation Act, 1949 – Sri Mahatma Basaveshwar Co-operative Bank Ltd., Afzalpur

The Reserve Bank of India (RBI) issued directions on October 7, 2026, under the Banking Regulation Act, 1949, restricting Sri Mahatma Basaveshwar Co-operative Bank Ltd., Afzalpur, from granting new loans, renewing advances, or making investments without prior RBI approval. The bank is also barred from incurring liabilities, accepting fresh deposits, or disposing of assets except as specified in the RBI directive. These restrictions take effect from the close of business on October 8, 2026.

The RBI cited the bank's failure to address supervisory concerns and protect depositors' interests despite prior engagement with its board and senior management. The central bank noted a lack of concrete efforts to improve functioning, necessitating these stringent measures. The bank is permitted to incur essential expenditures such as employee salaries, rent, and electricity bills as outlined in the RBI directions.

Depositors of the bank are eligible for deposit insurance claims up to ₹5,00,000 per account under the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961, subject to verification and submission of willingness. Depositors are advised to contact bank officials for further details or visit the DICGC website at www.dicgc.org.in for information on claim procedures.

The RBI clarified that these directions do not constitute a license cancellation and the bank may continue operations under specified restrictions until its financial position improves. The central bank will monitor the situation and may modify or extend the directions as necessary to safeguard depositors' interests. The restrictions will remain in force for six months from October 8, 2026, subject to review.