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CS Professional · Banking and Insurance - Laws and Practice · Banking Operations

RBI granted Deccan Bank Ltd permission to open a branch at Hosur subject to a condition. Later RBI found the bank failed to comply with that condition and wishes to revoke the permission. Which procedure does Section 23 prescribe?

RBI can revoke by a written order, but only after giving the bank a reasonable opportunity to show cause. Section 23(4) provides this where a condition imposed on the permission has not been complied with.

  1. ARBI may revoke by an order in writing after giving the bank reasonable opportunity to show causeCorrect
  2. BRBI may revoke it without notice by internal resolution
  3. CRBI must first obtain the Central Government's consent to revoke
  4. DRBI may revoke only through a court order

Explanation

Section 23(4) allows RBI, where in its opinion a condition imposed under the section has not been complied with, to revoke the permission by order in writing after affording reasonable opportunity to show cause. No Central Government consent or court order is mentioned. Option B skips the show-cause requirement.

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