Abstract

Publication Note: This paper is already published on Manupatra

Abstract:

This article examines the powers of the Reserve Bank of India (RBI) to supersede the Board of Directors of multi-State co-operative banks under Section 36AAA read with Section 56 of the Banking Regulation Act, 1949. Analysing the Supreme Court’s decision in *Sandeep S. Ghandat v. Reserve Bank of India*, alongside the related Bombay High Court judgment, it explores the statutory framework governing the removal of elected boards and the appointment of an administrator to manage a bank’s affairs. The article considers the relationship between the democratic governance of co-operative institutions and the RBI’s responsibility to maintain banking stability, protect depositors, and address instances of mismanagement. It further examines the scope of the RBI’s regulatory authority, the legal limits on the exercise of its powers, and the implications of board supersession for institutional autonomy and accountability. The analysis highlights the importance of balancing effective banking regulation with statutory compliance and the principles governing the exercise of regulatory discretion.