On February 13, 2025, the Reserve Bank of India (RBI) imposed several restrictions on New India Co-operative Bank due to supervisory concerns. These directives, effective from the close of business on February 13, will remain in force for six months, subject to review.
Key Restrictions Imposed by RBI
The RBI has prohibited the bank from granting or renewing loans and advances, making any investments, or incurring any liabilities, including accepting fresh deposits, without prior approval. Additionally, depositors are currently unable to withdraw funds from their savings, current, or any other accounts during this six-month period.
Depositors’ Reactions and Concerns
Following the announcement, numerous customers gathered outside the bank’s branches, expressing anxiety over the sudden restrictions. One depositor, Seema Waghmare, shared her distress, stating, “We deposited money just yesterday, but they did not say anything… They should have told us that this was going to happen… They are saying that we will get our money within 3 months… We have EMIs to pay, we have no idea how we will do all of that…”
Deposit Insurance and Protection Measures
Despite the restrictions, eligible depositors are entitled to receive a deposit insurance claim amount of up to ₹5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC). This insurance covers all bank deposits, including savings, fixed, current, and recurring deposits, ensuring a safety net for depositors in such situations.
Bank’s Operational Allowances
While the bank faces stringent restrictions, it is permitted to incur expenses related to employee salaries, rent, and electricity bills. Additionally, customers can access their lockers using coupons issued by the bank.
Background and Implications
This action marks the first significant intervention against a co-operative bank in Maharashtra since the collapse of the Punjab and Maharashtra Co-operative Bank, which faced large-scale fraudulent loans. The RBI’s measures aim to protect depositors’ interests and maintain financial stability.
Next Steps for Depositors
Depositors are advised to stay informed through official communications from the bank and the RBI. It’s essential to understand the provisions of the DICGC insurance scheme and the process for claiming insured amounts. For detailed information, depositors can refer to the DICGC’s official guide.
Conclusion
The RBI’s restrictions on New India Co-operative Bank have understandably caused concern among its customers. However, with the DICGC insurance in place and the RBI’s oversight, depositors have mechanisms to safeguard their interests during this period.
