RBI imposes stringent restrictions on Motiram Agrawal Jalna Merchants Co-operative Bank for six months

The Reserve Bank of India (RBI), exercising its powers under Sub-section (1) of Section 35 A read with Section 56 of the Banking Regulation Act, 1949, has issued a directive imposing significant restrictions on Motiram Agrawal Jalna Merchants Cooperative Bank Limited, Jalna. These Directions became effective from the close of business on April 10, 2026, and will remain in force for a period of six months, subject to review. The RBI’s action was necessitated by a reported shortfall in the bank’s liquid assets and a lack of concrete efforts by the bank’s management to address liquidity issues and safeguard depositors’ interests.

Under the imposed Directions, the bank is prohibited from several key banking activities without prior RBI approval, including granting or renewing loans, making investments, incurring new liabilities, accepting fresh deposits, and disbursing payments. Due to the bank's present liquidity position, depositors are not permitted to withdraw amounts from their accounts, though they are allowed to set off loans against deposits under specified conditions. Essential expenditures, such as employee salaries, rent, and electricity bills, are permitted. Eligible depositors are entitled to receive a deposit insurance claim of up to ₹5,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC), as per the DICGC Act, 1961. This measure is intended to facilitate the bank's financial improvement while protecting depositors, and it does not constitute a cancellation of the banking license.

• Actor: Reserve Bank of India (RBI).
• Bank: Motiram Agrawal Jalna Merchants Cooperative Bank Limited, Jalna.
• Effective Date: April 10, 2026.
• Duration: Six months, subject to review.
• Legal Basis: Section 35 A read with Section 56 of the Banking Regulation Act, 1949.
• Reason: Shortfall in liquid assets.
• Depositor Claim: Up to ₹5,00,000 from DICGC.

Glossary

Section 35 A of the Banking Regulation Act, 1949: Empowers the RBI to issue directions to banking companies in the public interest or to prevent their affairs from being conducted detrimentally to the interests of depositors.

Deposit Insurance and Credit Guarantee Corporation (DICGC): An RBI subsidiary that provides insurance cover for bank deposits.