The RBI has today superseded the Board of Directors of New India Cooperative Bank Ltd., Mumbai, for a period of 12 months.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).
RBI Imposes Restrictions on New India Co-operative Bank
The Reserve Bank of India (RBI) has imposed stringent restrictions on Mumbai’s New India Co-operative Bank following detected financial irregularities. As a result, customers are unable to withdraw funds, and the bank has been barred from offering new loans or accepting deposits. However, depositors are protected under the Deposit Insurance Scheme, ensuring coverage of up to Rs 5 lakh in case of the bank’s collapse.
Restrictions Imposed on the Bank
Starting February 13, 2025, the RBI has enforced several limitations on New India Co-operative Bank, including:
- A ban on issuing new loans or renewing existing ones.
- Prohibition from accepting new investments or deposits.
- Restriction on making payments or selling any assets.
- Prevention of withdrawals from savings, current, or any other accounts.
These restrictions will remain in effect for six months from the implementation date.
Reason for RBI’s Action
The RBI has determined that the financial health of the bank is weak, raising concerns about its ability to meet obligations. To safeguard customer interests, the central bank has restricted withdrawals. Efforts are underway to restore normal banking operations at the earliest, with an appointed administrator and advisers assessing the situation.
Steps Taken for Revival
- RBI has superseded the bank’s board due to mismanagement.
- An administrator and a committee of advisers, including a chartered accountant, have been appointed to oversee operations.
- The Economic Offences Wing (EOW) of Mumbai Police is investigating alleged fund misappropriation by certain bank staff.
- Eligible depositors will receive up to Rs 5 lakh under the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Financial Condition of the Bank
New India Co-operative Bank has been struggling financially, reporting a loss of Rs 23 crore in the financial year ending March 2024 and Rs 31 crore in fiscal 2023.
The RBI’s restrictions are a precautionary measure aimed at protecting depositors while working towards stabilizing the bank.
