RBI bars New India Co-operative Bank from new loans and deposits | Mumbai News

The RBI’s directive, issued on Thursday, bars the Mumbai-based bank from granting loans, accepting deposits, or allowing withdrawals due to supervisory concerns about its financial position.

NEW DELHI: Chaos erupted outside the New India Co-operative Bank, in Mumbai, on Friday after the Reserve Bank of India (RBI) imposed restrictions on the bank, effectively halting its business operations from February 13, 2025.
The RBI’s directive, issued on Thursday, bars the Mumbai-based bank from granting loans, accepting deposits, or allowing withdrawals due to supervisory concerns about its financial position.
Customers of the New India Cooperative Bank in Mumbai were seen rushing to the branch in panic following the Reserve Bank of India’s (RBI) decision to impose a set of severe restrictions on the bank.
The RBI’s move is a response to concerns about the bank’s financial stability, and these restrictions include a ban on withdrawals by depositors.
The measures were enforced from the close of business on Thursday and will remain in effect for a period of six months, though they are subject to a future review by the central bank.
The RBI stated that due to the bank’s current liquidity position, it has been ordered to prevent any withdrawals from savings, current, or other types of accounts held by depositors.

The central bank clarified that no money could be withdrawn from accounts until further notice, adding to the already heightened uncertainty surrounding the situation.
The restrictions have caused significant distress among the bank’s customers, many of whom are worried about their immediate financial needs.
One such customer, Seema Waghmare, expressed her frustration over the unexpected situation.
“We deposited money just yesterday, but they did not say anything… They should have told us that this was going to happen. Now they are saying we’ll get our money within three months. We have EMIs to pay, and no idea how we’ll manage that,” news agency ANI quoted Waghmare as saying.
The sentiment echoed the concerns of many who find themselves in a difficult spot due to the bank’s sudden imposition of restrictions.
Despite the prohibitive withdrawal rules, the RBI has allowed the bank to offset loans against existing deposits under certain conditions, in line with its directives. The bank is also permitted to incur necessary expenses, including salaries for employees, rent, and utility bills.
Furthermore, the RBI’s directions state that, from the close of business on February 13, 2025, the bank cannot grant or renew any loans or advances, make any new investments, or accept fresh deposits without prior approval from the RBI. These actions were taken due to supervisory concerns arising from recent developments at the bank, which the RBI believes might threaten the safety of its depositors’ funds.
To provide some reassurance, the RBI confirmed that eligible depositors would be entitled to a deposit insurance claim of up to Rs 5 lakh for their deposits under the Deposit Insurance and Credit Guarantee Corporation (DICGC). This step is intended to protect depositors and minimize the financial impact during this uncertain period.
(With agency inputs)