RBI Cracks Down on New India Co-operative Bank: Depositors Face Withdrawal Freeze

The RBI has imposed restrictions on Mumbai-based New India Co-operative Bank due to liquidity concerns, barring withdrawals, loan approvals, and new deposits. Customers, especially senior citizens, are frustrated as they struggle to access their funds. Eligible depositors can claim up to ₹5 lakh through the Deposit Insurance and Credit Guarantee Corporation (DICGC).

CONTENTS:

• • RBI Imposes Restrictions on New India Co-operative Bank Amid Liquidity Concerns
  • Customers Queue Outside New India Co-operative Bank as RBI Imposes Restrictions

RBI Cracks Down on New India Co-operative Bank: Depositors Face Withdrawal Freeze

RBI Imposes Restrictions on New India Co-operative Bank Amid Liquidity Concerns

The Reserve Bank of India has prohibited New India Co-operative Bank from issuing or renewing loans, accepting new deposits, making investments, disbursing payments for liabilities, or selling assets due to supervisory concerns. This decision aims to safeguard depositors’ interests following recent significant developments at the bank, according to an RBI statement.

Given the bank’s current liquidity situation, withdrawals from savings, current, or any other accounts are not permitted. However, the bank may offset loans against deposits.

Depositors eligible under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme can claim up to ₹5 lakh for their deposits.

The RBI clarified that these restrictions do not equate to a banking license cancellation. The bank will continue operations under these limitations until its financial condition improves. The central bank will monitor the situation and take necessary steps in the best interest of depositors. These directives will be in effect for six months from February 13, 2025, subject to review.

The Reserve Bank of India (RBI) has placed multiple restrictions on Mumbai-based New India Co-operative Bank due to liquidity concerns, limiting withdrawals, loan approvals, and investments. These directives, which took effect at the close of business on February 13, 2025, will remain in force for six months, subject to review.

The Reserve Bank of India stated that, given the bank’s current financial condition, withdrawals from savings, current, or other accounts are not permitted. However, the bank is allowed to offset loans against deposits under specific conditions. It may also cover essential expenses such as employee salaries, rent, and electricity bills.

Additionally, the bank is barred from granting or renewing loans, making new investments, or taking on liabilities, including accepting fresh deposits, without prior approval from the RBI.

These measures were implemented to address supervisory concerns arising from recent developments and to safeguard depositors’ interests. Eligible depositors can claim up to ₹5 lakh through the Deposit Insurance and Credit Guarantee Corporation (DICGC).

Customers Queue Outside New India Co-operative Bank as RBI Imposes Restrictions

Following the Reserve Bank of India’s (RBI) decision to impose restrictions on Mumbai-based New India Co-operative Bank, long queues of anxious customers were seen outside its branches, particularly the Vijayanagar branch in Andheri. Many account holders expressed confusion and concern over when they would be able to access their funds, with some complaining about the bank’s lack of response and non-functional customer support services and mobile app.

A significant number of those waiting in line were senior citizens. Bank officials distributed coupons to customers, allowing them access to their lockers.

The RBI’s restrictions took effect at the close of business on February 13, 2025, and will remain in place for six months, subject to review. As part #f these directives, the bank is prohibited from allowing withdrawals from any savings, current, or other accounts. However, it is permitted to offset loans against deposits under specific conditions outlined by the RBI.

Additionally, the bank can incur expenses related to essential operations such as employee salaries, rent, and utility payments. Without prior RBI approval, it cannot grant or renew loans, make investments, or accept new deposits.

The RBI stated that these measures were implemented due to supervisory concerns arising from recent developments and to protect the interests of depositors. Eligible depositors will be able to claim up to ₹5 lakh through the Deposit Insurance and Credit Guarantee Corporation (DICGC).