Reserve Bank of India (RBI) has placed strict restrictions on New India Co-operative Bank Limited, Mumbai, citing supervisory concerns arising from recent developments in the bank. These restrictions, issued under Section 35A read with Section 56 of the Banking Regulation Act, 1949, came into effect from the close of business on February 13, 2025, and will remain in force for six months.
Key Restrictions on the Bank
As per RBI’s directive (Ref. No. CO.DOS.SED.No.D-01/12-22-350/2024-2025), the bank cannot do the following without prior RBI approval:
Grant or renew loans and advances
Make any new investments
Accept fresh deposits
Borrow funds or take on any new liabilities
Disburse any payments, including those related to its obligations
Sell, transfer, or dispose of any of its assets
Moreover, withdrawals from savings, current, or any other accounts have been completely restricted due to the bank’s current liquidity situation. However, depositors may set off their loans against their deposits under specific conditions mentioned in RBI’s directive.
What This Means for Depositors
Depositors of New India Co-operative Bank will still be eligible for deposit insurance coverage up to ₹5 lakh, as per the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961. They can submit their claims after verification, and more details are available on the DICGC website (www.dicgc.org.in) or from bank officials.
Not a License Cancellation
RBI clarified that these restrictions do not mean the bank’s license has been canceled. The bank will continue operating under these limitations until its financial situation improves. The RBI will closely monitor developments and may modify the restrictions as needed to safeguard depositors’ interests.
Update
On Feb 14, customers gathered outside Mumbai’s New India Co-operative Bank after RBI barred it from issuing new loans and suspended withdrawals for six months due to liquidity concerns. RBI said the move was needed to protect depositors but did not specify the exact issues.
Update
Mumbai Police have filed a case against Hitesh Praveenchand Mehta, the former General Manager of New India Co-operative Bank, for allegedly embezzling ₹122 crore from the bank.
Mehta, who was in charge of the bank’s branches in Dadar and Goregaon, is accused of misusing his position between 2020 and 2025 to commit financial fraud. The case was registered after the bank’s Chief Accounts Officer filed a complaint at Dadar Police Station.
Police believe Mehta may have had a partner in the crime. The case has now been handed over to the Economic Offences Wing (EOW) for further investigation. An FIR has been registered under sections 316(5) and 61(2) of the Bharatiya Nyaya Sanhita (BNS), according to ANI.
