THE LEGAL SECTIONS THAT COULD BE APPLICABLE FOR THE

GIVEN PROBLEM. PENAL AS WELL AS CIVIL LAWS/ CIRCULARS/

RBI REGULATIONS THAT WERE VIOLATED BY THE COMPANY AND
THE BANK ARE AS FOLLOWS:

1. Section 35A read with section 56 of the Banking Regulation Act of 1949
It empowers the RBI to issue directives to banks and take measures "to prevent the affairs
of any banking company from being managed in a way harmful to the interests of the
depositors or adverse to the interests of the banking company." The RBI may also impose
limits on banks under the legislation to achieve improved governance and oversight. The
RBI stated that the directives were issued in the exercise of powers granted to it under
Subsection (1) of Section 35A of the Banking Regulation Act of 1949, as read with
Section 56 of the same Act. The RBI has also stated that the issue of the guidelines
should not be interpreted as the central bank's termination of a banking licence.
2.