RBI Imposes Restrictions on New India Co-operative Bank to Safeguard Depositors
In a significant move, the Reserve Bank of India (RBI) has prohibited the New India Co-operative Bank from granting or renewing loans, accepting new deposits, making investments, disbursing payments for its liabilities, or selling any of its properties. This decision comes in response to supervisory concerns following recent developments at the bank and aims to protect the interests of its depositors, as stated by the regulator.
 The RBI has highlighted the bank’s current liquidity position, directing it to halt all withdrawals from savings and current accounts while allowing the set-off of loans against deposits. This measure is intended to maintain financial stability amid growing concerns.
Eligible depositors will still be able to claim deposit insurance for their deposits up to ₹5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC), ensuring some level of financial security for those affected by the restrictions.
It is important to note that these actions do not equate to the cancellation of the bank’s banking license. The New India Co-operative Bank will remain operational under the specified restrictions until its financial situation improves. The RBI will continue to closely monitor the bank’s performance and take necessary actions to safeguard depositor interests.
These restrictions will be in effect for six months, starting from the close of business on February 13, 2025, and will be subject to review.