New India Co-operative Bank Crisis: Depositors Urge Revival or Merger

The New India Co-operative Bank (NICB), once a trusted financial institution for thousands of account holders, finds itself in troubled waters following a large-scale embezzlement case involving Rs 122 crore. On February 13, 2025, the Reserve Bank of India (RBI) imposed restrictions on the bank, severely limiting withdrawals and triggering widespread concern among depositors.

Depositors Unite Under NICB Depositors’ Foundation

In response to the crisis, affected account holders formed the NICB Depositors’ Foundation, a body representing the interests of the depositors. The foundation has been at the forefront of efforts to seek a resolution, either through a revival plan or a merger with a more stable financial institution.

Led by Foundation President TN Raghunatha, a delegation of depositors recently met with key RBI-appointed advisors at the bank’s corporate office in Prabhadevi. These advisors — Ravindra Chavan and Ravindra Sapra — have been tasked with assessing the bank’s condition and exploring possible solutions.

Dialogue with RBI-Appointed Advisors

During the meeting, the advisors conveyed a cautiously optimistic stance. While they did not provide specific details, they confirmed that multiple options, including a potential merger, are actively under consideration. They also assured the delegation that all concerns and formal representations would be forwarded to the Reserve Bank along with their own observations and recommendations.

Read More: New India Co-op Bank Scam: 8th Accused Promised 50% Interest on Stolen Funds

Relief Demanded for Hardship-Burdened Depositors

One of the most pressing demands made by the foundation was an increase in the withdrawal limit, currently capped at ₹25,000 per account. The foundation urged that this be raised to ₹1.5 lakh, especially to support senior citizens and co-operative housing societies who are facing significant financial stress due to the ongoing restrictions.

Further Engagement with RBI Officials

The delegation also met with three Assistant General Managers from the RBI’s Supervision Department at the central bank’s Maker Chambers office in Cuffe Parade. According to Foundation Vice President Rajani Pitale, the officials were receptive to their concerns and promised to escalate the matter to senior authorities.

Additionally, a formal copy of the depositors’ representation was submitted to the Cuffe Parade police station as part of the Foundation’s continued advocacy.

Arrests Made in Connection with the Scam

As investigations continue, the Mumbai Police have arrested eight individuals in connection with the Rs 122 crore embezzlement. These developments highlight the severity of the financial misconduct and reinforce the urgency for resolution measures to protect depositors’ interests.

Conclusion

While no final decision has been made public, the depositors are pressing for clarity and timely action. The ongoing dialogue between depositors and regulatory authorities signals an intent to find a solution that restores confidence in the co-operative banking system.

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