Mumbai, Feb 14 : In a significant move, the Reserve Bank of India (RBI) has superseded the board of directors of the New India Co-operative Bank for a period of 12 months, effective from February 14. The central bank’s intervention follows growing financial concerns and regulatory breaches within the cooperative bank.
Just a day before, the RBI imposed strict restrictions on the bank, barring it from issuing new loans or accepting fresh deposits for the next six months. This decision has raised alarm among depositors, many of whom are now unable to withdraw funds from their savings, current, or other accounts until further notice.
Administrator and Advisory Committee Appointed
To steer the bank through this crisis, the RBI has appointed Shreekant, former Chief General Manager of the State Bank of India (SBI), as the Administrator. Assisting him will be a Committee of Advisors, including Ravindra Sapra, former General Manager of SBI, and Abhijeet Deshmukh, a Chartered Accountant.
Depositors’ Concerns and RBI’s Assurance
With deposit withdrawals halted, customers are understandably worried. However, the RBI has assured depositors that those eligible under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme will be able to claim up to ₹5 lakh in insured deposits.
While the bank cannot extend new loans, accept deposits, or make fresh investments without RBI approval, it can continue to use its funds for essential expenses such as employee salaries and utility payments.
Financial Struggles Behind RBI’s Action
The New India Co-operative Bank has been battling financial challenges for the past two years, posting a loss of ₹23 crore in FY 2023-24. Although its advances dropped from ₹1,330 crore to ₹1,175 crore, its deposits saw a slight increase, rising from ₹2,406 crore to ₹2,436 crore.
Despite these setbacks, the RBI has clarified that the bank’s licence has not been cancelled. The central bank will continue to monitor the situation closely, ensuring measures are taken to protect depositors and restore financial stability. ( With inputs from IANS)