The Reserve Bank of India (RBI) has imposed strict restrictions on Mumbai-based New India Co-operative Bank Limited, preventing it from issuing new loans, accepting fresh deposits, or allowing withdrawals for six months. This move comes as the bank grapples with financial instability, raising concerns among its customers.
The central bank cited financial health and liquidity issues as the primary reasons behind these restrictions. According to its annual report, the bank suffered a loss of ₹22.78 crore in the financial year ending March 2024, following a ₹30.75 crore loss the previous year. To safeguard depositors and maintain financial stability, the RBI has barred the bank from issuing or renewing loans, making new investments, borrowing funds, accepting fresh deposits, or disbursing payments to settle liabilities. Additionally, it cannot sell, transfer, or dispose of its assets without prior RBI approval.
The most immediate impact is on customers, who are now unable to withdraw money from their accounts. Many have expressed frustration and concern about meeting financial obligations such as rent, EMIs, and daily expenses. On February 14, worried customers gathered outside branches in Mumbai, seeking answers. Some reported depositing money just before the restrictions were imposed, unaware of the impending crisis.
Despite the bank’s financial troubles, the RBI has clarified that its banking license remains intact. This means the bank can continue operating under restrictions while the central bank monitors its progress. Deposit insurance provides some relief—eligible depositors can claim up to ₹5 lakh under the Deposit Insurance and Credit Guarantee Corporation (DICGC) in case of a claim.
Although the bank cannot issue new loans, it is permitted to use depositors' funds to offset existing loans and pay essential expenses like employee salaries, rent, and utility bills. The restrictions will remain in place for six months, during which the RBI will evaluate the bank’s situation and determine further action. If the financial condition improves, some limitations may be eased; otherwise, more stringent measures could follow.
Customers are advised to stay updated through official RBI statements and announcements from the bank.
