The Reserve Bank of India (RBI) has permitted depositors of the crisis-hit New India Co-operative Bank to withdraw up to Rs 25,000, effective from February 27. This decision comes after the central bank imposed All Inclusive Directions (AID) on the Mumbai-based cooperative bank on February 13, restricting any withdrawals from savings, current, or other accounts.
With this relaxation, more than 50% of the total depositors will be able to withdraw their entire balances, while the remaining depositors can withdraw up to Rs 25,000 from their deposit accounts. The RBI stated, “The Reserve Bank, after reviewing the bank’s liquidity position in consultation with the Administrator, has decided to allow a deposit withdrawal of up to Rs 25,000 per depositor, with effect from February 27, 2025. The depositors may use the branch as well as ATM channel of the bank for this withdrawal, however, the aggregate amount that can be withdrawn will be Rs 25,000 per depositor or the balance available in their account whichever is lower.”
*Background of the New India Co-operative Bank Case*
The issue stems from the misappropriation of funds by some staff members of the bank, including the bank’s general manager Hitesh Mehta, who is accused of misappropriating Rs 122 crore in cash from the bank’s safe over time. The RBI had initially prohibited the bank from issuing new loans and suspended deposit withdrawals, followed by superseding the bank’s board for mismanagement.
The RBI has appointed Shreekant, former Chief General Manager of State Bank of India (SBI), as the Administrator to manage the bank’s affairs for 12 months. A ‘Committee of Advisors’ has also been appointed to assist the Administrator.
As of March 2024, the bank had 28 branches, primarily in the Mumbai region. Its overall assets decreased to Rs 1,175 crore from Rs 1,330 crore the previous year, and the gross non-performing assets ratio increased to nearly 7.96%.
*RBI Reconstitutes Committee of Advisors*
The RBI has reconstituted the Committee of Advisors (CoA) to the Administrator, effective February 25, 2025. The CoA now includes Ravindra Sapra, former General Manager of SBI; Ravindra Tukaram Chavan, former Deputy CGM of Saraswat Co-operative Bank; and Anand M Golas, a chartered accountant.
The central bank is closely monitoring the developments and will continue to take necessary steps in the interest of the depositors. The restrictions, which came into force on February 13, will remain for six months and are subject to review.
Eligible depositors are entitled to receive deposit insurance claim amounts of up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
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