Banking · Banking Regulation Act
A cooperative bank is placed under a moratorium by the Central Government under Section 45 of the Banking Regulation Act 1949. During the moratorium period, the RBI prepares a draft scheme of amalgamation. In this context, which of the following statements is legally accurate regarding the withdrawal of deposits and the conditions of service for the employees?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The Central Government must approve every single withdrawal above 1 Lakh during the moratorium, and employees are automatically terminated upon the commencement of the amalgamation.
- 2The RBI cannot merge a cooperative bank with a public sector bank under Section 45, and the moratorium only applies to individual depositors, not corporate entities.
- 3The moratorium prohibits all payments except those specifically permitted by the RBI, and the amalgamation scheme can legally alter the service conditions and pay scales of the employees of the transferor bank.✓
- 4Corporate depositors must be paid immediately as tax liabilities take precedence over the moratorium, and employees are guaranteed identical pay scales by law.
Correct answer
The moratorium prohibits all payments except those specifically permitted by the RBI, and the amalgamation scheme can legally alter the service conditions and pay scales of the employees of the transferor bank.
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