KMCB had been under regulator’s directions for 15 months
KOZHIKODE: After being under Reserve Bank of India (RBI) control for 15 months, the RBI said on August 28 it has withdrawn the directions imposed on the Kozhikode-based Kerala Mercantile Cooperative Bank (KMCB).
“The Reserve Bank of India, on being satisfied that in the public interest it is necessary to do so, in exercise of the powers vested in it under sub- section (2) of Section 35A read with Section 56 of the Banking Regulation Act, 1949, hereby withdraws with effect from August 28, 2020, the said Directions so issued to Kerala Mercantile Co- operative Bank Kozhikode,” the RBI statement said.
Section 35A of the Banking Regulation Act, 1949 vests power in the RBI to give directions to banks and can take action, “to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the banking company.”
The Kerala Mercantile Cooperative Bank was placed under RBI Directions first time on May 29, 2019 for a period of six months. However, the ‘directions’ were extended and modified from time to time, with the latest being on June 19, 2020.
And in the latest round, there were modifications in terms, whereby among other conditions, a sum not exceeding Rs50,000 of the total balance in every savings bank or current account or any other deposit account by whatever name called, was allowed to be withdrawn by the depositors of the bank subject to certain conditions.