People have gathered outside Mumbai-based New India Co-operative Bank as the Reserve Bank of India (RBI) has issued a notice to the Bank imposing restrictions, which prohibits it from issuing new loans or allowing withdrawals of deposits due to ongoing supervisory concerns.
In a notice, the RBI said, “…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 borrowing of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in 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, 2025, a copy of which is displayed on the bank’s website / premises for perusal by interested members of the public.”
Account holders are confused about when they will get their money as they are left clueless since the Bank’s customer support services and app are not functioning. Per reports, most people gathered outside its Vijayanagar branch in Andheri, Mumbai are given coupons by the Bank, which they can use to access their lockers.
What’s allowed and what’s not? And till when?
The RBI’s announcement came into force from the close of business on Thursday and would remain in force for a period of six months and are subject to review. The central bank said that effective close of business on February 13, 2025, New India Co-operative Bank is barred from granting or renewing any loans or advances. It also cannot make any new investments or accept fresh deposits. It is also not allowed to disburse any payments. The bank is not allowed to dispose of any of its properties, it said in the notice issued on Thursday. “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,” the RBI said.
New India Co-operative Bank has been directed not to allow withdrawal of any amount from savings bank or current accounts or any other account of a depositor, considering its present liquidity position. However, it is allowed to set off loans against deposits subject to the conditions stated in the above RBI Directions.
The RBI further said, “The eligible depositors would be entitled to receive deposit insurance claim amount of their deposits up to a monetary ceiling of Rs 5,00,000 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.”
The Bank may incur expenditure in respect of certain essential items such as salaries of employees, rent, and electricity bills.