RBI imposes several restrictions on New India Co-operative Bank

The RBI has imposed several restrictions on city-based New India Co-operative Bank, including on withdrawal of funds by depositors, amid supervisory concerns. The Reserve Bank's Directions to New India Co-operative Bank, Mumbai 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.  

According to the RBI, 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.

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The lender is permitted to offset loans against deposits under the conditions outlined in the aforementioned RBI Directions. It is allowed to incur expenses related to essential items such as employee salaries, rent, and electricity bills.

The RBI has stated that starting at the close of business on February 13, 2025, the bank must not grant or renew any loans and advances, make any investments, or incur any liabilities—including accepting new deposits—without prior approval.

These measures are necessary due to supervisory concerns arising from recent significant developments within the bank, aimed at protecting the interests of depositors. Additionally, eligible depositors will be entitled to receive deposit insurance claims of up to Rs 5 lakh for their deposits from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

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