RBI Allows Depositors of New India Co-operative Bank to Withdraw Up to ₹25,000 Amid Crisis
In a partial relief to depositors of the crisis-hit New India Co-operative Bank Limited, the Reserve Bank of India (RBI) on Monday permitted withdrawals of up to ₹25,000 from their accounts. This decision comes after the central bank imposed All-Inclusive Directions (AID) on February 13, restricting all withdrawals due to supervisory concerns.
Partial Relief for Depositors
The RBI, in consultation with the newly appointed Administrator, reviewed the bank’s liquidity position and decided to allow withdrawals of up to ₹25,000 per depositor, effective from February 27, 2025. This relaxation is expected to enable more than 50% of depositors to withdraw their entire balances, while others can access up to ₹25,000 or their available balance, whichever is lower. Withdrawals can be made through the bank’s branches and ATMs.
“The Reserve Bank is closely monitoring the situation and will take necessary steps to safeguard the interests of depositors,” the central bank stated.
Regulatory Actions and Governance Concerns
The RBI had earlier superseded the bank’s board on February 14, appointing an Administrator and a Committee of Advisors (CoA) to oversee its operations. On Monday, the RBI reconstituted the CoA to include:
– Ravindra Sapra, former General Manager of State Bank of India
– Ravindra Tukaram Chavan, former Deputy CGM of Saraswat Co-operative Bank Ltd
– Anand M Golas, Chartered Accountant
The regulatory actions were prompted by concerns over the bank’s financial health and governance. Under Section 35A read with Section 56 of the Banking Regulation Act, 1949, the bank has been barred from granting loans, making investments, accepting fresh deposits, or disbursing payments without prior RBI approval.
Probe into Alleged Embezzlement
The crisis deepened as law enforcement agencies initiated a probe into allegations of fund embezzlement at the bank. The Mumbai Police registered a case against the bank’s General Manager and Head of Accounts, Hitesh Mehta**, and his associates for allegedly misappropriating ₹122 crore. The case has been transferred to the Economic Offences Wing (EOW) for further investigation.
Safeguarding Depositors’ Interests
The RBI’s decision to allow partial withdrawals aims to provide immediate relief to depositors while ensuring the bank’s stability. The central bank has assured depositors that it is taking all necessary steps to address the situation and protect their interests.
As the investigation unfolds and the RBI continues to monitor the bank’s operations, depositors and stakeholders await further updates on the resolution of the crisis.