RBI supersedes Mumbai-based Abhyudaya Co-op Bank’s Board
- November 28, 2023
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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RBI supersedes Mumbai-based Abhyudaya Co-op Bank’s Board
Subject: Economy
Section: Monetary policy
The Banking Regulations Act, enables RBI to supersede the board of directors of a bank for up to 12 months if it feels that the board is not working in the interest of shareholders and depositors. If such a step is taken, RBI could run the bank by appointing an administrator till a new board is appointed. In such a scenario, while shareholders wealth decline, depositors money stay safe.
The central bank can supersede the board if the top management fails to deliver.
RBI also retains the discretion to levy penalties depending on the gravity of the non-compliance, with powers available under the RBI Act of 1934