RBI halts all business of New India Co-operative Bank; customers raise concerns

The Reserve Bank of India (RBI) on Friday issued a notice to the New India Co-operative Bank Limited, Mumbai, to hold all financial operations. 

A notice issued by the RBI read, "It is hereby notified for information of the public that...the Reserve Bank of India (RBI) ...has issued certain Directions to New India Co-operative Bank Limited, Mumbai (“the bank”), whereby, as from the close of business on February 13, 2025, the bank shall not, without prior approval of RBI in writing, grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in the discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI Direction dated February 13."

“Considering the bank's present liquidity position, the bank has been directed not to allow withdrawal of any amount from savings bank or current accounts or any other account of a depositor but is allowed to set off loans against deposits subject to the conditions stated in the above RBI Directions. The bank may incur expenditure in respect of certain essential items such as salaries of employees, rent, electricity bills, etc,” it said.

These directions are necessitated due to supervisory concerns emanating from the recent material developments in the bank, and to protect the interest of depositors of the bank, RBI said.

For Depositors:

The eligible depositors would be entitled to receive deposit insurance claim amount of their deposits up to a monetary ceiling of Rs 25,00,000 in the same capacity and in the same right, from the Deposit Insurance and Credit Guarantee Corporation (DICGC), as applicable under the provisions of the DICGC Act, 1961, based on submission of willingness by the depositors concerned and after due verification. 

The depositors may contact the bank officials for further information. Details may also be accessed on the DICGC website.

“The issue of the above Directions by the RBI should not per se be construed as cancellation of banking license by RBI. The bank will continue to undertake banking business subject to restrictions specified in the said Directions till its financial position improves. The RBI continues to monitor the position of the bank and will take necessary actions including modifications of these Directions, as warranted, depending Ligon circumstances and in the interest of the depositors,” it added. 

Meanwhile, people gather outside the New India Co-operative Bank after the RBI issued the notice to halt all business of the bank.

Seema Waghmare, a customer of the New India Co-operative Bank, told ANI, "We deposited money just yesterday, but they did not say anything... They should have told us that this was going to happen... They are saying that we will get our money within three months... We have EMIs to pay, we have no idea how we will do all of that..."