A day after the Reserve Bank of India (RBI) imposed restrictions on the New India Co-operative Bank due to supervisory concerns, the central bank today superseded the Board of Directors of the Bank for 12 months. It has appointed Shreekant, former Chief General Manager (CGM) of SBI, as the Administrator to manage the bank’s affairs during the period.
In a press release, RBI said, “The Reserve Bank has today superseded the Board of Directors of New India Cooperative Bank Ltd., Mumbai, for a period of 12 months. Consequently, the Reserve Bank has appointed Shri Shreekant, former Chief General Manager of State Bank of India (SBI) as ‘Administrator’ to manage the affairs of the bank during this period. The Reserve Bank has also appointed a ‘Committee of Advisors’ to assist the Administrator in discharging his duties. The members of the Committee of Advisors are Shri Ravindra Sapra (former General Manager, SBI) and Shri Abhijeet Deshmukh (Chartered Accountant).”
The central bank said that the action was necessitated due to certain material concerns emanating from poor governance standards observed in the bank.
Earlier, the RBI imposed restrictions on New India Co-operative Bank disallowing it from granting or renewing any loans or advances. Per the directive, the Bank 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. The above mentioned restrictions, it had said, would remain in force for a period of six months and are subject to review.
However, New India Co-operative Bank is allowed to set off loans against deposits subject to the conditions stated in the above RBI Directions. The Bank may also incur expenditure in respect of certain essential items such as salaries of employees, rent, and electricity bills.
Meanwhile, the customers are anxiously lined up in queues outside the branches of New India Co-operative Bank, waiting for clarity.