The Reserve Bank of India (RBI) has barred Mumbai-based New India Co-operative Bank from issuing new loans and suspended deposit withdrawals for six months. The central bank cited supervisory concerns and the lender's liquidity position issues over the unprecedented move.
The RBI move prevents depositors from withdrawing funds as the bank faces liquidity issues. Soon after the announcement, anxious customers were seen queuing outside various branches of New India Co-operative Bank.
The RBI announced that effective from the close of business on February 13, 2025, New India Co-operative Bank is barred from granting or renewing any loans or advances. It also cannot make any new investments or accept fresh deposits. It is also not allowed to disburse any payments. The bank is not allowed to dispose of any of its properties or make any investments or borrow funds.
The directions were necessary due to concerns arising from "recent material developments" at the bank, and to protect the interest of depositors, the RBI said. However, it did not elaborate on the specifics of these concerns.
The central bank added that eligible depositors are entitled to deposit insurance claims up to Rs 5 lakh, as per the deposit insurance scheme. Depositors have been asked to submit their claims with the bank. At the end of March 2024, New India Co-op Bank had deposits worth Rs 2,436 crore and advances worth Rs 1,175 crore.
It reported a loss of Rs 22.78 crore for FY24 and Rs 42.11 crore in FY23.
In April 2024, in a similar move, the RBI had restricted Kotak Mahindra Bank from on-boarding new customers through its online and mobile banking channels and from issuing fresh credit cards. However, on Wednesday, the RBI had lifted the curbs on Kotak Mahindra Bank following satisfactory compliance with regulatory requirements.