Directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949 – Samarth Urban Co-operative Bank Ltd., Osmanabad (Maharashtra), – Extension of Period
Distilled Policy Brief
- The Reserve Bank of India (RBI) extended its regulatory directions on Samarth Urban Co-operative Bank Ltd. under Section 35A read with Section 56 of the Banking Regulation Act, 1949, highlighting ongoing supervisory intervention in stressed cooperative lenders.
- Section 35A empowers the RBI to issue directions to banking entities to prevent their affairs from being conducted in a manner detrimental to the interests of depositors or prejudicial to the banking entity itself.
- Section 56 of the Act applies these regulatory provisions specifically to cooperative societies, bringing Urban Cooperative Banks (UCBs) under the direct regulatory and supervisory ambit of the RBI for banking functions.
🎯 Prelims High-Yield Examination Points
Section 35A read with Section 56 of the Banking Regulation Act, 1949, which empowers the RBI to issue binding directions, restrict withdrawals, and oversee the management of Urban Co-operative Banks (UCBs).
⚖️ Mains Analytical & Syllabus Linkages
The dual control of cooperative banks (RBI for banking functions, Registrar of Cooperative Societies for administrative functions) and the impact of regulatory interventions on depositor confidence and financial inclusion.
🎯 UPSC Prelims Practice Drill
With reference to the regulation of Urban Cooperative Banks (UCBs) in India, consider the following statements: 1. Under Section 35A of the Banking Regulation Act, 1949, the Reserve Bank of India (RBI) is empowered to issue directions to prevent the affairs of a banking entity from being conducted in a manner detrimental to the interests of its depositors. 2. Section 56 of the Banking Regulation Act, 1949, specifically applies the regulatory and supervisory provisions of the Act to cooperative societies, bringing UCBs under the RBI's regulatory ambit for banking functions. Which of the statements given above is/are correct?
- [A] 1 only
- [B] 2 only
- [C] Both 1 and 2
- [D] Neither 1 nor 2
▶ Reveal Official Answer & Analytical Explanation
Statement 1 is correct because Section 35A of the Banking Regulation Act, 1949, empowers the RBI to issue binding directions to banking entities to prevent their affairs from being conducted in a manner detrimental to depositors' interests. Statement 2 is correct because Section 56 of the same Act extends these regulatory and supervisory provisions specifically to cooperative societies, bringing Urban Cooperative Banks (UCBs) under the direct regulatory ambit of the RBI for their banking operations.
🏛️ 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.