New India Co-operative Bank Barred by RBI: What Happens to Your Money?

The Reserve Bank of India (RBI) has imposed restrictions on New India Co-operative Bank due to liquidity issues. From February 13, 2025, the bank is prohibited from granting loans, renewing advances, accepting new deposits, or allowing withdrawals, safeguarding depositors.

Restrictions on New India Co-operative Bank to Safeguard Depositors’ Interests

The Reserve Bank of India (RBI) has placed New India Co-operative Bank, Mumbai, under restrictions, citing liquidity problems. As of March 2024, the bank holds deposits of ₹2,436 crore.

The RBI’s decision prohibits the bank from issuing new loans, renewing advances, or accepting fresh deposits, starting February 13, 2025. This move also restricts the bank from making investments, granting loans, or disbursing payments, in a bid to safeguard the interests of its depositors.

New India Co-operative Bank’s Liquidity Crisis

RBI’s intervention comes as concerns over the bank’s liquidity continue to grow, prompting a freeze on savings and current accounts.

Eligible depositors will be able to claim up to ₹5 lakh under the deposit insurance scheme. The RBI is closely monitoring the situation and will continue to review its restrictions, which will remain in place for six months.

New India Co-operative Bank Faces Financial Losses

New India Co-operative Bank has struggled with losses over the past two fiscal years. The bank reported a loss of ₹227.8 million for the year ending March 2024, following a loss of ₹307.5 million in fiscal 2023, as per news reports.

Its advances declined to ₹11.75 billion as of March 31, 2024, down from ₹13.30 billion the previous year, while its deposits increased slightly to ₹24.36 billion from ₹24.06 billion.

Conclusion

The RBI’s decision to impose restrictions on New India Co-operative Bank highlights the growing concerns over the bank’s financial stability and liquidity challenges. Despite a slight increase in deposits, the persistent losses and declining advances have raised alarms.

While depositors are assured of insurance coverage up to ₹5 lakh, the ongoing freeze on transactions and the six-month restriction period signal a critical period for the bank’s recovery. The RBI’s vigilant oversight will be crucial in determining the bank’s future course of action, with an emphasis on protecting depositors’ interests.

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