RBI restricts New India Co-operative Bank, customers unable to withdraw funds
PTC Web Desk: In a significant move, the Reserve Bank of India (RBI) has imposed stringent restrictions on Mumbai-based New India Co-operative Bank, preventing customers from withdrawing funds and barring the bank from issuing new loans or accepting deposits. The regulatory action comes in light of financial irregularities detected by the central bank. Effective from February 13, the RBI has implemented several restrictions on New India Co-operative Bank to safeguard customer interests.
The bank is now prohibited from issuing new loans or renewing existing ones. It cannot accept new investments or deposits. The bank is barred from making any payments and is not allowed to sell any of its assets during the restriction period. These restrictions will remain in place for six months, commencing from February 13, 2025.
The RBI's decision to impose restrictions was influenced by concerns over the bank's deteriorating financial health. Questions were raised about the bank's liquidity and ability to meet its financial obligations. In response, the RBI enforced these measures to protect the interests of the depositors.
The news of the restrictions triggered panic among customers, leading to large crowds gathering at bank branches to withdraw their funds. However, due to RBI's restrictions, customers were unable to access their money, including savings, current, and other accounts. Photos and videos circulating on social media show frustrated customers standing outside locked bank doors.
Despite the restrictions, customers’ deposits are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme, which guarantees protection of up to Rs 5 lakh per depositor in the event of the bank's collapse.
The RBI has assured depositors that these restrictions are intended to stabilise the bank's financial condition and protect their interests. The central bank is closely monitoring the situation and will take appropriate measures to resolve the financial issues faced by New India Co-operative Bank.
- With inputs from agencies
