Mumbai-based New India Co-operative Bank has been barred from carrying out regular business operations by the Reserve Bank of India (RBI) due to concerns over its financial health and liquidity position.
Bank customers have crowded the Bank since morning. They fear about their money deposited in Bank. Police was called by Bank Authorities to handle the public in Bank.
RBI’s Restrictions on the Bank
The RBI has prohibited the bank from issuing new loans and restricting deposit withdrawals for a period of six months. This decision has been taken due to the bank’s weak liquidity position and overall financial stress.
In an official statement, the central bank said:
“Considering the bank’s present liquidity position, the bank has been directed not to allow withdrawal of any amount from savings bank or current accounts or any other account of a depositor but is allowed to set off loans against deposits.”
DICGC to Protect Depositors’ Funds
To protect depositors, the Deposit Insurance and Credit Guarantee Corporation (DICGC) will pay eligible depositors a maximum of ₹5 lakh under its deposit insurance scheme. This measure aims to provide relief to those affected by the restrictions.
Bank’s Financial Struggles
According to a Reuters report, New India Co-operative Bank has been struggling financially in recent years. The bank posted a loss of over ₹22 crore in the fiscal year ending March 2024, raising concerns over its sustainability.
RBI Monitoring the Situation
The RBI clarified that these restrictions do not automatically mean that the bank’s license will be canceled. The central bank will closely monitor the bank’s financial condition and decide on further actions based on its recovery efforts.
