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CS Professional · Banking and Insurance - Laws and Practice · Control over Organization of Banks

The Central Government ordered a moratorium on Sagar Bank Ltd for 2 months and later extended it twice by 2 months each. A further extension of 1 month is now proposed. Under Section 45, what is the position?

The extension is not allowed. Six months have already run (2+2+2), and Section 45(2) caps the total moratorium period at six months, though it permits extensions from time to time within that cap.

  1. AAllowed, because the total would be 7 months and extensions are unlimited
  2. BAllowed only with Parliament's approval
  3. CNot allowed, because the total period of moratorium cannot exceed six monthsCorrect
  4. DNot allowed, because only one extension is permitted

Explanation

Elapsed period is 2+2+2 = 6 months. Section 45(2) permits extensions from time to time but the total moratorium cannot exceed six months, so even 1 more month would exceed the cap. The number of extensions is not limited.

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