• Notification Date: 15-02-2025
• Notification No: N/A

RBI Steps In to Takeover New India Co-op Bank on Governance Concerns, Customers Remain Stranded As Withdrawals are Frozen

Reserve Bank of India (RBI) stepped into the Mumbai-headquartered New India Co-operative Bank, replacing its Board of Directors for 12 months because of governance issues. The RBI move follows a day after the RBI put restrictions on the bank, halting half-yearly withdrawals because of liquidity concerns. Savings, current and other account withdrawals were not feasible for depositors, which led to panic among individuals whose daily spending and bill payments are dependent on the bank.

To operate the bank, the RBI had put in place former SBI executive Shreekant as administrator and formed an advisory committee to guide him. The bank cannot disburse new loans, roll over outstanding ones, or accept new deposits without RBI approval.

Depositors may be repaid a maximum of Rs. 5 lakh on a case of eligibility by the Deposit Insurance and Credit Guarantee Corporation (DICGC). With 28 branches in Mumbai, the limitations are a reminder of the 2019 PMC Bank crisis when financial fraud led to curbs and subsequent recasting. The RBI action is to bailout the bank and protects depositors' interests besides bringing an end to poor governance strategies.