Directions under Section 35 A read with Section 56 of the Banking Regulation Act, 1949 – Ashok Sahakari Bank Ltd., Ahmednagar
Distilled Policy Brief
- The Reserve Bank of India (RBI) issued directions under Section 35 A read with Section 56 of the Banking Regulation Act, 1949, restricting Ashok Sahakari Bank Ltd., Ahmednagar from granting loans, making investments, and accepting fresh deposits starting August 28, 2026.
- Eligible depositors are entitled to receive deposit insurance claims up to ₹5,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC) under the DICGC Act, 1961.
🎯 Prelims High-Yield Examination Points
What are the powers of the RBI under Section 35A read with Section 56 of the Banking Regulation Act, 1949, regarding cooperative banks, and what is the monetary ceiling for deposit insurance coverage by the DICGC?
⚖️ Mains Analytical & Syllabus Linkages
Examine the regulatory role of the RBI in addressing supervisory concerns and liquidity issues in cooperative banks, and discuss the implications of banking restrictions on depositors.
🎯 UPSC Prelims Practice Drill
Consider the following statements regarding the powers of the Reserve Bank of India (RBI) and deposit insurance in India: 1. The RBI can issue directions to cooperative banks restricting them from granting loans and accepting fresh deposits under Section 35 A read with Section 56 of the Banking Regulation Act, 1949. 2. In the event of such directions being issued, eligible depositors are entitled to receive deposit insurance claims up to a statutory ceiling of ₹5,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC) under the DICGC Act, 1961. 3. The issuance of directions by the RBI under Section 35 A automatically amounts to the cancellation of the banking license of the concerned bank. Which of the statements given above are correct?
- [A] 1 and 2 only
- [B] 2 and 3 only
- [C] 1 and 3 only
- [D] 1, 2 and 3
▶ Reveal Official Answer & Analytical Explanation
Statement 1 is correct: The RBI is empowered to issue directions to banks (including cooperative banks via Section 56) under Section 35 A of the Banking Regulation Act, 1949, restricting operations such as granting loans and accepting fresh deposits. Statement 2 is correct: Eligible depositors are entitled to receive deposit insurance claims up to ₹5,00,000 from the DICGC under the DICGC Act, 1961. Statement 3 is incorrect because the issuance of such directions by the RBI should not per se be construed as cancellation of the banking license; the bank continues to undertake banking business subject to the specified restrictions until its financial position improves.
🏛️ 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.