RBI Restricts New India Cooperative Bank Businesses. Here's What Customers Must Do Now

These directions came into effect on from the close of business on Thursday and are expected to remain in force for a period of six months, subject to review. 

At the same time, the regulator said that it is not revoking the banking license of the bank.

Source : PTI

The Reserve Bank of India imposed multiple restrictions on the Mumbai-based New India Co-operative Bank on Thursday. The central bank barred depositors from withdrawing any funds from the bank, restricted the lender from granting any advances or renewing any loans, amid supervisory concerns.

Issuing the RBI Direction on February 13, 2025, the central bank said, “The bank shall 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 any of its properties or assets except as notified in the RBI Direction.”

These directions came into effect on from the close of business on Thursday and are expected to remain in force for a period of six months, subject to review. 

The banking regulator barred depositors from withdrawing any funds from their accounts with the bank and said, “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.”

What Can The Bank Not Do?

According to the RBI's Direction, these are the activities which cannot be undertaken by the New India Co-operative Bank till further notice.

- Distribute loans or advances.

- Renew loans or advances.

- Make any investment.

- Accept fresh deposits

- Incur liability via borrowing funds

- Make payment against liabilities or obligations

- Agree to sell, transfer or dispose of any of its properties or assets

What Can The Bank Do?

- Disburse salaries of employees

- Pay electricty, rent and other bills.

- Set off loans against deposits, subject to RBI's conditions.

RBI Says Banking License Not Being Revoked

At the same time, the regulator said that it is not revoking the banking license of the bank. The RBI said that the bank will continue its banking operations in line with the restrictions mentioned in the latest Direction. These measures will be enforced by the regulator till it sees an improvement in the financial position of the lender.

What Can Affected Customers Do?

The central bank also informed the next steps for the customers of the New India Co-operative Bank. The RBI said that eligible depositors remain entitled to receive ‘deposit insurance claim amount of their deposits up to a monetary ceiling of Rs 5,00,000/- (Rupees five lakh only) in the same capacity and in the same right, from the Deposit Insurance and Credit Guarantee Corporation (DICGC), as applicable under the provisions of the DICGC Act, 1961, based on submission of willingness by the depositors concerned and after due verification’.