**Executive Summary**
The Reserve Bank of India (RBI) issued directions under Section 35 A read with Section 56 of the Banking Regulation Act, 1949 to The Baghat Urban Co-operative Bank Ltd., Solan, effective October 8, 2025. These directions impose restrictions on the bank's operations due to supervisory concerns and aim to protect depositors' interests. The restrictions will be in place for six months, subject to review.
**Key Points / Main Content**
* **Restrictions on Bank Operations:**
* The bank cannot grant or renew loans, make investments, incur liabilities, disburse payments, enter into compromises, or dispose of assets without prior written approval from RBI.
* Depositors are limited to withdrawing a maximum of ₹10,000 from savings, current, or other accounts, subject to conditions stated in the RBI Directions.
* The bank can incur expenditure on essential items like salaries, rent, and electricity.
* **Deposit Insurance:**
* Eligible depositors are entitled to receive deposit insurance claims up to ₹5,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC), subject to verification and submission of willingness.
* Depositors can contact bank officials for more information and may also access the DICGC website.
* **RBI's Stance:**
* The issuance of these directions should not be construed as cancellation of the bank's license.
* The bank will continue banking operations subject to the specified restrictions, while the RBI monitors the bank's financial position.
* RBI may take further actions, including modifying the directions.
* These directions are effective for six months from October 08, 2025 and are subject to review.
**Impact Analysis**
**The Baghat Urban Co-operative Bank Ltd.**
* **Impact:** The bank's operational activities are significantly restricted, affecting its ability to conduct regular business.
* **Action Required:** The bank must adhere to the directions issued by RBI and seek approval for activities that are now restricted. The bank must also display the RBI directions on their premises.
**Depositors**
* **Impact:** Depositors are limited in the amount of funds they can withdraw. However, their deposits are insured up to ₹5,00,000 by DICGC.
* **Action Required:** Depositors who wish to claim insurance on their deposits should contact bank officials to submit their willingness and undergo verification.
**Reserve Bank of India (RBI)**
* **Impact:** Responsible for monitoring the bank's progress and stability, and has the authority to modify the directions if needed.
* **Action Required:** Monitor the bank's financial position, take actions as warranted, and review directions after six months.
Key Entities Referenced
Banking Regulation Act, 1949: Indian law that regulates banking companies. Section 35 A allows RBI to issue directions to banking companies.
Reserve Bank of India (RBI): The central bank of India, responsible for regulating the banking sector.
The Baghat Urban Co-operative Bank Ltd., Solan: A cooperative bank in Solan, Himachal Pradesh, subject to directions from the RBI.
Section 35 A read with Section 56: Sections of the Banking Regulation Act that enable the RBI to issue directions to co-operative banks.
Deposit Insurance and Credit Guarantee Corporation (DICGC): An institution that provides insurance cover on bank deposits. The DICGC Act, 1961 defines its role and operation.
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
वेबसाइट
:
www.rbi.org.in/hindi
संचार वर्भाग, केंद्रीय कायाालय, शहीद भगत ससिंह मागा, फोटा, म िंबई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
October 08, 2025
Directions under Section 35 A read with Section 56 of the Banking Regulation
Act, 1949 – The Baghat Urban Co-operative Bank Ltd., Solan
It is hereby notified for information of the public that in exercise of powers vested in
it under sub section (1) of Section 35 A read with Section 56 of the Banking Regulation
Act, 1949, the Reserve Bank of India (RBI) vide Directive Ref. No.
SML.DCBS.CRRB.No.S79/02-31-005/2025-2026 dated October 06, 2025, has issued
certain Directions to The Baghat Urban Co-operative Bank Ltd., Solan, whereby, as
from the close of business on October 08, 2025, the bank shall not, without prior
approval of RBI in writing, grant or renew any loans and advances, make any
investment, incur any liability including borrowal of funds and acceptance of fresh
deposits, disburse or agree to disburse any payment whether in discharge of its
liabilities and obligations or otherwise, enter into any compromise or arrangement and
sell, transfer or otherwise dispose of any of its properties or assets except as notified
in the RBI Direction dated October 06, 2025, a copy of which has been directed to be
displayed on the bank's website / premises for perusal by interested members of the
public. Considering the bank's current liquidity position, the bank has been directed to
permit withdrawal of a sum not exceeding ₹10,000/- (Rupees Ten Thousand only)
of the total balance held in savings bank or current accounts or any other account of a
depositor but is allowed to set off loans against deposits subject to the conditions stated
in the above RBI Directions. The bank may incur expenditure in respect of certain
essential items such as salaries of employees, rent, electricity bills, etc., as specified
in the said Directions.
2. RBI has in the recent past engaged with the Board and Senior Management of the
bank for improvement in its functioning. However, lack of concrete efforts taken by the
bank to address the supervisory concerns and to protect the interest of depositors of
the bank, necessitated issuance of these Directions.
3. The eligible depositors would be entitled to receive deposit insurance claim amount
of their deposits up to a monetary ceiling of ₹5,00,000/- (Rupees Five Lakh only) in the
same capacity and in the same right, from the Deposit Insurance and Credit Guarantee
Corporation (DICGC), as applicable under the provisions of the DICGC Act, 1961,
based on submission of willingness by the depositors concerned and after due
verification. The depositors may contact the bank officials for further information.
Details may also be accessed on the DICGC website: www.dicgc.org.in.
4. The issue of the above Directions by the RBI should not per se be construed as
cancellation of the banking license by RBI. The bank will continue to undertake banking
business subject to restrictions specified in the said Directions till its financial position
improves. The RBI continues to monitor the position of the bank and will take2
necessary actions including modifications of these Directions, as warranted,
depending upon circumstances and in the interest of the depositors.
5. These Directions shall remain in force for a period of six months from the close of
business on October 08, 2025 and are subject to review.
(Brij Raj)
Press Release: 2025-2026/1275 Chief General Manager