Directions under Section 35 A read with Section 56 of the Banking Regulation Act, 1949 – Puducherry Co-operative Urban Bank Ltd
Distilled Policy Brief
- The Reserve Bank of India issued directions to Puducherry Co-operative Urban Bank Ltd under Section 35 A read with Section 56 of the Banking Regulation Act, 1949, restricting loans, investments, and borrowings without prior approval.
- Eligible depositors are entitled to receive deposit insurance claims up to ₹5,00,000 from the Deposit Insurance and Credit Guarantee Corporation under the DICGC Act, 1961.
🎯 Prelims High-Yield Examination Points
Reserve Bank of India directions issued to cooperative banks under Section 35A read with Section 56 of the Banking Regulation Act, 1949, and deposit insurance coverage limits up to ₹5,00,000 by the Deposit Insurance and Credit Guarantee Corporation under the DICGC Act, 1961.
⚖️ Mains Analytical & Syllabus Linkages
Examine the regulatory role of the Reserve Bank of India over cooperative banks and the mechanisms available for depositor protection during financial stress.
🎯 UPSC Prelims Practice Drill
Consider the following statements regarding the regulatory powers of the Reserve Bank of India (RBI) over co-operative banks and deposit insurance: 1. The RBI can issue directions to co-operative banks restricting loans, investments, and fresh deposits under the relevant provisions of the Banking Regulation Act, 1949. 2. The issuance of directions or restrictions on a bank's operations by the RBI automatically amounts to the cancellation of its banking license. 3. Eligible depositors of such banks are entitled to receive deposit insurance claims up to a monetary ceiling of ₹5,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC). Which of the statements given above are correct?
- [A] 1 and 2 only
- [B] 1 and 3 only
- [C] 2 and 3 only
- [D] 1, 2 and 3
▶ Reveal Official Answer & Analytical Explanation
Statement 1 is correct because the RBI is empowered under Section 35A read with Section 56 of the Banking Regulation Act, 1949, to issue restrictive directions to co-operative banks. Statement 2 is incorrect as the text explicitly states that the issuance of directions should not per se be construed as cancellation of the banking license by the RBI. Statement 3 is correct because eligible depositors are entitled to receive deposit insurance claims up to ₹5,00,000 from the DICGC under the DICGC Act, 1961.
🏛️ Historical Twin PYQ Anchor (2021)
Consider the following statements regarding the "National Clean Air Programme (NCAP)": 1. It is implemented by the Ministry of Environment, Forest and Climate Change. 2. Central Pollution Control Board acts as the sole regulatory executive body.