Customers panic as RBI bans withdrawals from New India Co-operative Bank

RBI imposed severe restrictions on New India Co-operative Bank, including a ban on withdrawals for six months, due to concerns over the bank's financial stability

Panic spread among customers of New India Co-operative Bank after the Reserve Bank of India (RBI) imposed severe restrictions, including a ban on withdrawals for six months, due to concerns over the bank’s financial stability. Videos surfaced online showing people gathering outside the bank’s branches, seeking clarity on the situation.

 

The RBI announced that the Mumbai-based co-operative bank cannot issue new loans, make investments, or borrow funds, citing supervisory concerns and liquidity issues. The restrictions, which took effect from the close of business on Thursday, will remain in place for six months but are subject to review. However, the central bank did not disclose the specific reasons for the sudden action.

 

The move has caused significant distress among depositors, many of whom rely on their bank accounts for daily financial needs. Customers were seen rushing to branches in a panic, worried about their savings, bill payments, and loan EMIs.

 

One such depositor, Seema Waghmare, expressed frustration, telling ANI, “We deposited money just yesterday, but they didn’t inform us about this. Now, they say we’ll get our money within three months. We have EMIs to pay and no idea how we’ll manage.”

 

Another customer Bhanumati, said, "The bank didn't tell us anything... Nobody has the time to check their phone instantly... I have had an account in this bank for the last 32-35 years... I was about to open an FD (Fixed Deposit account) as well with this bank, but luckily, I didn't get the time to do that."

 

  Despite the ban on withdrawals, the RBI has permitted the bank to offset loans against existing deposits under certain conditions. Additionally, the bank is allowed to incur essential expenses, including employee salaries, rent, and utility bills, ensuring minimal operational disruptions.

 

The RBI’s crackdown on New India Co-operative Bank follows a series of regulatory actions against smaller financial institutions struggling with liquidity and compliance issues. The situation will be closely monitored in the coming months as the bank’s future remains uncertain.

 

(With agency inputs)