Days after imposing strict restrictions on New India Co-operative Bank, the Reserve Bank of India (RBI) has eased withdrawal limits. Starting February 27, customers will be allowed to withdraw up to ₹25,000 from their deposit accounts, offering relief to more than half of the bank’s depositors.
On February 13, the RBI placed the Mumbai-based New India Co-operative Bank under All Inclusive Directions (AID), barring withdrawals due to supervisory concerns. Shortly after, the central bank superseded the bank’s Board of Directors for a year and appointed Shreekant, former Chief General Manager of SBI, as the Administrator to oversee its operations. A Committee of Advisors (CoA) was also set up to assist in managing the bank’s affairs.
After reviewing the bank’s liquidity, the RBI on February 24 announced that depositors could withdraw up to ₹25,000 each from February 27. This relaxation allows over 50% of depositors to withdraw their entire balances, while others can access up to ₹25,000. Withdrawals will be available through bank branches and ATMs, but customers cannot exceed the set limit or their available balance, whichever is lower.
The bank, which has 28 branches, primarily in Mumbai, remains under RBI's close watch. The central bank has also reconstituted the CoA, effective February 25, with new members:
The RBI stated that it would continue to monitor developments and take necessary steps to protect depositors’ interests. The restrictions, which took effect from February 13 for six months, are subject to review.
The central bank had earlier justified the move citing "supervisory concerns from recent material developments" in the bank. Meanwhile, eligible depositors can claim up to ₹5 lakh in deposit insurance** from the Deposit Insurance and Credit Guarantee Corporation (DICGC).