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RBI Imposes Restrictions on New India Co-operative Bank Due to Supervisory Concerns.

Banking & Finance | Dated: 17 Feb 2025

In February 2025, the Reserve Bank of India (RBI) imposed restrictions on Mumbai (Maharashtra)-based New India Co-operative Bank Limited, preventing it from issuing new loans and suspending deposit withdrawals due to concerns about its financial position. The restrictions were imposed under Section 35A of the Banking Regulation Act, 1949, to safeguard the interests of depositors.

🎯 Key Highlights:

- These measures came into effect on February 13, 2025, and will remain in force for six months, subject to future review by the RBI.
- As per RBI directions, New India Co-operative Bank is prohibited from granting or renewing loans, making new investments, or accepting new deposits without prior RBI approval, though loan set-offs against deposits are permitted under specific conditions.
- RBI has allowed New India Co-operative Bank to incur essential expenses like employee salaries, rent, and electricity bills, while ensuring eligible depositors receive up to Rs 5 lakh insurance from DICGC as per the provisions of the DICGC Act, 1961.

💡 Other Important Facts:

(i) The RBI superseded the Board of Directors (BoDs) of New India Co-operative Bank for 12 months to address governance issues under Section 36 AAA and Section 56 of the Banking Regulation Act, 1949.
(ii) Shreekant, a former Chief General Manager of State Bank of India (SBI), has been appointed as the administrator to manage the bank’s affairs.
(iii) A committee of advisors, including Ravindra Sapra (former GM of SBI) and Abhijeet Deshmukh (Chartered Accountant), has been formed to assist in stabilizing operations, examining the financial situation, and working towards the bank’s revival.

📚 Test Your Knowledge:

Which institution Recently imposed restrictions on New India Co-operative Bank due to supervisory concerns?

Correct Answer: RBI

🚀 Quick Recap:

About RBI

Governor : Sanjay Malhotra
Headquarter : Mumbai