A large crowd has gathered outside the New India Co-operative Bank in Mumbai, Maharashtra, following the Reserve Bank of India’s (RBI) directive to cease all banking operations. “We deposited money just yesterday, but they did not say anything. They should have told us that this was going to happen. They are saying that we will get our money within 3 months. We have EMIs to pay, we have no idea how we will do all of that,” said a customer of the New India Co-operative Bank.
The RBI has issued certain Directions to New India Co-operative Bank Limited, Mumbai. RBI directed that the bank will not, without prior approval of RBI in writing, grant or renew any loans and advances, make any investment, incur any liability including borrowal 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 its properties or assets except as notified in the RBI Direction dated February 13, 2025.
“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 but is allowed to set off loans against deposits subject to the conditions stated in the above RBI Directions,” read the RBI circular. However, RBI allowed the bank to incur expenditure in respect of certain essential items such as salaries of employees, rent, electricity bills, etc.
New India Co-operative Bank: What RBI Said?
“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,” read the RBI circular.
Eligible depositors are entitled to get insurance claim amount of their deposits up to a monetary ceiling of Rs 5,00,000. To receive this, depositors must submit their willingness and provide necessary documentation, which will be verified by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
“The issue of the above Directions by the RBI should not per se be construed as cancellation of banking license by RBI. The bank will continue to undertake banking business subject to restrictions specified in the said Directions till its financial position improves. The RBI continues to monitor the position of the bank and will take necessary actions including modifications of these Directions, as warranted, depending upon circumstances and in the interest of the depositors,” said the RBI.
RBI said that these Directions will remain in force for a period of 6 months from the close of business (February 13, 2025) and will be reviewed later.
