Document title: Directions under Section 35 A read with Section 56 of the Banking Regulation Act, 1949 – Ashok Sahakari Bank Ltd., Ahmednagar
Issuing authority: Reserve Bank of India
Reference number: Directive Ref. No.S4110 /12-22-377 / 2026-27
Date: August 28, 2026
Banking and Credit
The RBI, exercising powers under sub‑section (1) of Section 35 A read with Section 56 of the Banking Regulation Act, 1949, has directed Ashok Sahakari Bank Ltd. that, as of the close of business on 28 August 2026, the bank shall not, without prior written approval of the RBI, grant or renew any loans and advances, make any investment, incur any liability including borrowing of funds, accept fresh deposits, disburse or agree to disburse any payment, enter into any compromise or arrangement, or sell, transfer or otherwise dispose of any of its properties or assets except as specifically notified. The bank is also prohibited from allowing withdrawals from savings, current or any other depositor accounts, though it may set off loans against deposits subject to the conditions stated in the RBI Directions. Expenditure on essential items such as employee salaries, rent, electricity bills and similar necessities is permitted.
Financial Stability and Inclusion
To protect depositor interests, eligible depositors will be entitled to a deposit insurance claim of up to ₹5,00,000 per depositor from the Deposit Insurance and Credit Guarantee Corporation (DICGC) under the DICGC Act, 1961, following submission of willingness and due verification. Depositors may obtain further information from bank officials or the DICGC website. The RBI clarifies that the issuance of these Directions does not constitute cancellation of the bank’s licence; the bank will continue banking operations subject to the imposed restrictions until its financial position improves. The RBI will continue to monitor the bank’s situation and may modify the Directions as warranted.
Regulatory and Policy Measures
These Directions are issued due to supervisory concerns arising from recent material developments in the bank and the bank’s insufficient remedial actions despite prior engagement with its Board and senior management. The restrictions are intended to safeguard depositor interests while the bank works to improve its liquidity and overall financial health. The Directions will remain in force for a period of six months from the close of business on 28 August 2026 and are subject to review. The RBI reserves the right to amend or lift the restrictions based on evolving circumstances.
The RBI’s actions reflect a focused regulatory intervention aimed at stabilising the bank’s operations, protecting depositors, and ensuring continued oversight during a period of financial stress.