Context:
The Reserve Bank of India (RBI) has lifted restrictions on Sangli Sahakari Bank, which had been in place for two and a half years.
- Background
- In 2022, the Reserve Bank of India had ordered that the bank would not advance loans and advances and make investment and incur any liability, including borrowing funds and fresh deposit, and disburse or enter into compromise or arrangement, and see or transfer or otherwise dispose of any of its properties or assets, without its previous written approval.
RBI Jurisdictions
The RBI can ban NBFCs from sanctioning and disbursing loans if they violate regulations. For example, in October 2024, the RBI banned four NBFCs from doing so due to excessive interest rates and other violations
The RBI can impose restrictions on banks for a variety of reasons, including:
- Digital business activities: In December 2020, the RBI instructed HDFC Bank to stop launching new digital business activities after recurring outages at its data center.
- Non-compliance: The RBI can impose restrictions on banks that don’t comply with regulations. For example, in March 2022, the RBI asked Paytm Payments Bank to stop adding new customers after an audit found non-compliance.
