If BB think, may order moratorium against FI for 6 months
may extend max 6 months.
Ì Cancellation of license[S-8]:
1. Ceasing to carry business
2. Suspension of business
3. Failed to keep minimum capital.
4. Failed to comply conditions given on license.
5. Not run as per objectives of in MoA.
6. liquidation
7. false /misleading info. /doc. to obtain license
8. convictions of FS/directors by offence under this Act
9. detrimental to interest of depositors
10. insufficient assets to cover debts of depositors
11. days show cause notice before cancel license & hearing
12. No activities after receipt of cancellation notice except
13.procedures to close business by BB approval
14.Cancellation not effect on rights/claims of FI/person
Cancellation of licenses of financial institutions [s-31]
BB may cancel license if-
1. Cease to carry on business in BD
2. Failed to comply any conditions u/s 31(2)
3. Failed to comply any conditions u/s 31(4)
ü BB may give opportunity to comply conditions if not prejudicial
to interest of depositors
ü Bank may appeal to managing committee of BB within 30
days of communication of decision.
Restrictions on payment of loan/advances[S-27]:
ü Bank shall not grant/pay loan/advance:
1. Against the security of its own shares
2. Sanction unsecured loans/advances/ guarantee to OR
Lien by any of following personso
Director,his family members.
o Firm/private company where bank/director/family have
interest as director,proprietor,partner.
o public company which is controlled by said bank/ its director,
family member Or having voting right minimum 20%.
3. Without approval of majority of directors(excluding him),not
grant any loan/advance/guarantee too
Director
o Individual,firm,companise where any director of the said
bank or their family has interest as partner,director,guarantor
ü MD, before end of month submit return to BB, particulars of
all loans/advances given to -
o Private/public Company wherein bank /its directors is director.
o Public company wherein bank/its directors is managing agent
or guarantor.
ü If BB think, any of above loan adversely to interest of
depositors,BB may order to -
o Prohibit sanction of further loan/advances to them
o Secure the payment in advance of such loan within time fixed
by BB.