In the wake of the Reserve Bank of India’s (RBI) recent six-month transaction ban on New India Co-operative Bank, over 100 concerned account holders convened at Keshav Gore Hall in Goregaon West on Sunday. The meeting aimed to address the pressing issue of recovering their hard-earned savings trapped due to the bank’s financial turmoil.
Background of the Crisis
Established in 1968 with the support of the late socialist leader and former defense minister George Fernandes, New India Co-operative Bank has been a cornerstone for many in Maharashtra and Gujarat. Operating 28 branches, the bank serves over 130,000 depositors, predominantly from poor and lower-middle-class backgrounds. A staggering 90% of these account holders have deposits under Rs.5 lakh.
The crisis erupted when an internal audit revealed a misappropriation of Rs.122 crore at the bank’s Prabhadevi and Goregaon branches. This discovery prompted the RBI to impose stringent restrictions, including halting all transactions and superseding the bank’s board for 12 months. Shreekant, a former Chief General Manager of the State Bank of India, has been appointed as the administrator to steer the bank through this turbulent period.
Depositors’ Plight
The sudden freeze has left depositors in a state of anxiety and confusion. Many have initiated claims for recovery through the bank’s official channels but remain uncertain about the timeline and assurance of retrieving their funds.
Neelima Kanore, a homemaker from Mira Road, shared her distress: “My husband suffered a paralytic attack, and our medical expenses are mounting. With over Rs.5 lakh locked in the bank, I am at a loss on how to proceed.”
Similarly, advocate and chartered accountant Ramesh Ladva expressed his concerns: “My family has multiple accounts and fixed deposits totaling around Rs.30 lakh. We had been saving diligently to purchase a home, and now our plans are in jeopardy.”
Senior citizen Rakesh Joshi, with Rs.35 lakh deposited in the Kandivali branch, lamented, “These are my lifelong savings, intended for my grandson’s education. The branch’s proximity to my residence made it convenient, but now I am filled with regret.”
Legal and Financial Implications
Banking expert Vishwas Utagi addressed the gathering, highlighting the complexities involved in the recovery process. He emphasized that while deposits up to Rs.5 lakh are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC), the disbursement is contingent upon the bank’s liquidation—a process that can be protracted. “The path ahead is arduous, and legal intervention may be necessary to expedite relief,” Utagi noted.
In response to the crisis, the RBI has barred the bank from granting new loans, renewing advances, or accepting fresh deposits without prior approval. These measures aim to safeguard the interests of the depositors and maintain financial stability.
Collective Action
Unified in their plight, the depositors drafted a formal complaint, which they submitted to the Goregaon police station. The complaint underscored the severe hardships faced by numerous families due to the inaccessibility of their funds and called for prompt action against the bank’s management for the alleged fraud.
Looking Forward
The unfolding situation with New India Co-operative Bank serves as a stark reminder of the vulnerabilities within the cooperative banking sector. Depositors are urged to stay informed, seek legal counsel, and explore alternative financial avenues to mitigate the impact of such unforeseen banking crises.
