RBI Restrictions On New India Co-operative Bank Spark Customer Panic

The Reserve Bank of India (RBI) has imposed restrictions on New India Co-operative Bank, located in Bandra, Mumbai, leading to widespread concern among account holders who are unable to access their deposits.

Customers have gathered in long lines outside the bank, trying to withdraw their funds.

The RBI’s decision, communicated to customers via messages on Friday morning, prevents the bank from accepting new deposits or allowing withdrawals. This has left many customers distressed, as they can no longer access their savings.

Customers Demand Prior Notice & Better Communication

Ajay More, a loyal customer for 22 years, shared his frustration, told IANS, “I have been banking here for 22 years. My wife and I have all our savings in this bank. Without any prior notice, we are now unable to access our money. We’ve been told to wait for 90 days — but how are we supposed to manage until then?”

Several customers criticized the suddenness of the RBI’s action, calling for prior notice.

Arbaaz Khan, another depositor, expressed his dissatisfaction, asserting, “We rely on this bank for daily expenses. Had we been informed earlier, we could have secured our funds. This sudden freeze is unfair.”

While the RBI has permitted limited withdrawals under certain conditions, many customers feel the allowed amounts are inadequate.

Vidya, who holds fixed deposits at the bank, said, “Now we’re told we can withdraw only under certain rules. If we had prior notice, we could have planned our finances better.”

RBI Restrictions Hit New India Co-op Bank; Freezes Withdrawals

The RBI’s restrictions come after concerns over the bank’s liquidity position and supervisory issues.

According to the RBI, the bank cannot allow withdrawals from savings, current, or other accounts.

However, it is permitted to adjust loans against deposits.

Payments for essential expenses, such as employee salaries, rent, and electricity bills, can still be processed.

The RBI’s statement stated, “Considering the bank’s present liquidity position, the bank has been directed not to allow withdrawal of any amount from savings bank or current accounts or any other account of a depositor but is allowed to set off loans against deposits subject to the conditions stated in the above RBI Directions. The bank may incur expenditure in respect of certain essential items such as salaries of employees, rent, electricity bills, etc.”

“The eligible depositors would be entitled to receive deposit insurance claim amount of their deposits up to a monetary ceiling of Rs 5,00,000 in the same capacity and in the same right, from the Deposit Insurance and Credit Guarantee Corporation (DICGC), as applicable under the provisions of the DICGC Act, 1961, based on submission of willingness by the depositors concerned and after due verification,” the statement further added.

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