RBI Section 35A curbs on Tiruvalla Urban Co-operative Bank, Kerala
Why in the news
On 8 October 2026 the Reserve Bank of India (RBI) placed The Tiruvalla Urban Co-operative Bank Ltd., Tiruvalla (Pathanamthitta, Kerala) under all-inclusive directions, citing the bank’s failure to act on supervisory concerns and protect depositors. A second lender, in Karnataka, received similar directions the same day.
Key facts
- Legal basis: Section 35A read with Section 56 of the Banking Regulation Act, 1949.
- Effective: close of business on 8 October 2026, for six months, subject to review.
- Restrictions: without prior written RBI approval, the bank cannot grant or renew loans, make investments, borrow or accept fresh deposits, make payments, or sell its assets.
- Withdrawals: no withdrawals are allowed from savings, current or other deposit accounts; loans may be set off against deposits under conditions.
- Essential spending such as staff salaries, rent and electricity bills is permitted.
- DICGC cover: eligible depositors may claim up to ₹5,00,000 under the DICGC Act, 1961, after verification.
- The directions are not a cancellation of licence; the bank continues business under restrictions.
Banks under 35A directions on 8 October 2026
| Bank | Location | Period |
|---|---|---|
| The Tiruvalla Urban Co-operative Bank Ltd. | Tiruvalla, Pathanamthitta (Kerala) | Six months |
| Sri Mahatma Basaveshwar Co-operative Bank Ltd. | Afzalpur (Karnataka) | Six months |
About the action
The RBI said it acted because the bank had not taken concrete steps on supervisory concerns. It will keep monitoring the bank and may modify the directions. Under the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961, claims need the depositor’s willingness and verification.
Exam angle
- Remember the pair: Section 35A with Section 56 of the BR Act, 1949 for co-operative banks.
- DICGC insurance limit: ₹5 lakh per depositor.
- Directions are temporary (six months here) and differ from licence cancellation.