The Reserve Bank of India (RBI) has imposed restrictions on New India Co-operative Bank Limited, Mumbai, prohibiting the issuance of new loans, acceptance of fresh deposits, and withdrawals for a period of six months. This action was taken by the central bank in response to apprehensions regarding the financial stability and liquidity of the bank.
As per the RBI's announcement, the bank is required to restrict all withdrawals from savings, current, and other account types due to its current liquidity constraints. This measure has sparked concern among the bank's customers, who are anxious about meeting their financial obligations.
What customers should know
> The instructions provided should not be interpreted as the revocation of the banking license by the Reserve Bank of India (RBI).
> Customer withdrawals are not permitted from savings, current, or any other accounts.
> Loans can be set-off by the bank against deposits as per RBI regulations.
> Essential payments such as employee salaries, rent, and utility bills can be made by the bank.
> Without RBI approval, the bank is prohibited from issuing new loans, renewing existing loans, making investments, or accepting new deposits.
> Eligible depositors can avail deposit insurance up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
> The bank will be allowed to conduct banking activities with certain limitations outlined in the instructions until its financial standing shows improvement.
> The RBI will oversee the bank's situation and will implement any required measures to protect the interests of the depositors.
> These instructions will be effective for a duration of six months starting from the end of business on February 13, 2025, and may be reassessed as necessary.
FAQs
I am a depositor. Can I withdraw my money?
No, as per the RBI’s directive, the bank cannot allow any withdrawals from savings or current accounts without approval.
I deposited money recently. What happens now?
Customers who recently deposited funds, like Seema Waghmare who spoke to ANI, are uncertain about their next steps.
While officials suggest that withdrawals may be possible in three months, no timeline is confirmed.
Will I get my money back?
Eligible depositors can receive up to Rs 5 lakh through the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Any amount above this limit remains uncertain unless RBI lifts the restrictions.
What about my loans and EMIs?
Loan repayments remain active.
However, borrowers can request to set off deposits against outstanding loans, as per RBI’s conditions.
Can the bank issue new loans or credit cards?
No.
The RBI has barred the bank from issuing fresh loans, renewing advances, and accepting new deposits.
Why did the RBI impose these restrictions?
The bank reported financial losses of Rs 22.78 crore in FY24 and Rs 30.75 crore in FY23.
As of FY24, its advances stood at Rs 1,175 crore, while deposits were Rs 2,436 crore.
Supervisory concerns led to RBI’s intervention.
Was the bank already facing issues before RBI’s action?
Yes.
Prior to the restrictions, the bank announced the discontinuation of mPassbook and Visa/MasterCard issuance.
It also issued notices for breaking open long-unused lockers starting January 15, 2025.
Can I still use digital banking services?
Yes, customers can access services like internet banking, UPI, NEFT, RTGS, and WhatsApp Banking.
What should depositors do now?
Monitor RBI updates, check with DICGC for claims, and stay informed about further decisions regarding the bank’s future.