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

The RBI finds that Narmada Bank Ltd has failed to comply with a condition imposed on its licence under section 22(1). The RBI does not consider that delay would prejudice depositors or the public. Before cancelling the licence, what must the RBI do?

The RBI must give the bank an opportunity, on terms it specifies, to take the necessary steps to comply with the breached condition. This is required unless the RBI forms the opinion that delay would prejudice depositors or the public.

  1. AGive the bank, on terms it specifies, an opportunity to take the necessary steps to comply with the conditionCorrect
  2. BObtain prior approval of the Central Government
  3. CPublish a notice in the Official Gazette seeking public objections
  4. DWait three years from the date of the default

Explanation

The proviso to section 22(4) requires the RBI, before cancelling under clause (ii) or (iii), to give an opportunity to comply on specified terms, unless it is of opinion that delay will be prejudicial to depositors or the public. No Central Government approval or Gazette notice is required at this stage.

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