Customers of Mumbai-based New India Co-operative Bank were in a state of panic after the Reserve Bank of India (RBI) imposed multiple financial restrictions on the bank. Following the RBI’s decision, long queues of customers were seen outside bank branches on Friday, as people rushed to withdraw their money.
Crowds Gather Outside Bank Branches
A large number of account holders gathered outside the Vijayanagar branch in Andheri, Mumbai. Many of them were senior citizens worried about the safety of their savings. Several customers complained that the bank was not responding to their queries, and its customer support services and mobile app were also non-functional.
To manage the crowd, bank officials issued coupons allowing customers access to their lockers. However, the primary concern remained: when and how they would be able to withdraw their deposited money.
Why Did RBI Impose These Restrictions?
RBI imposed strict restrictions on New India Co-operative Bank on Thursday due to supervisory concerns. The key restrictions include:
- The bank cannot issue new loans or renew existing ones.
- It is prohibited from accepting new deposits.
- The bank cannot make new investments or sell its assets.
- Withdrawals from savings, current, or any other accounts have been completely restricted.
- However, depositors can use the “set-off” facility to adjust deposits against loans.
Deposit Insurance Protection Up to ₹5 Lakh
According to RBI, account holders with deposits in the bank are eligible for insurance coverage of up to ₹5 lakh under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme.
Bank’s License Not Canceled
RBI clarified that these restrictions do not mean the cancellation of the bank’s banking license. The bank will continue to operate but only within the limitations imposed by RBI until its financial condition improves.
How Long Will These Restrictions Last?
The restrictions on New India Co-operative Bank are effective from February 13, 2025, for a period of six months. After this period, RBI will review the bank’s financial health and decide on further actions.
This move by RBI has left thousands of account holders in uncertainty, as they worry about accessing their hard-earned money. While the restrictions are currently for six months, the future course of action will depend on RBI’s assessment.
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