The Reserve Bank of India (RBI) has issued a set of restrictions on New India Co-operative Bank Limited, Mumbai, effective from February 13, 2025, due to concerns over the bank’s liquidity and financial stability. The restrictions will remain in place for the next six months, during which the bank cannot grant new loans, accept deposits, or permit withdrawals without prior approval from the RBI.
Key Highlights:
Details of RBI’s Directive:
In its notice, the RBI stated that New India Co-operative Bank cannot:
- Grant or renew any loans or advances.
- Make any new investments.
- Accept fresh deposits or incur additional liabilities.
- Disburse payments without prior written approval from the RBI.
- Enter into any compromise or dispose of assets.
The RBI clarified that these restrictions do not mean the bank’s license has been revoked. Instead, they are preventive measures to protect the interests of depositors while the central bank closely monitors the situation.
What Led to the Restrictions?
The RBI’s decision comes after “recent material developments” at New India Co-operative Bank. Although the central bank did not elaborate, the bank’s financial reports reveal ongoing challenges:
- The bank reported a loss of ₹227.8 million for the fiscal year ending March 2024, following a ₹307.5 million loss the previous year.
- Its loan book declined from ₹13.30 billion to ₹11.75 billion as of March 31, 2024.
- Deposits increased slightly from ₹24.06 billion to ₹24.36 billion in the same period.
These consistent losses and a shrinking loan portfolio have raised concerns about the bank’s overall financial health.
RBI’s History of Actions Against Cooperative Banks:
This is not the first time the RBI has taken stringent measures against a cooperative bank.
In 2019, the Punjab and Maharashtra Co-operative Bank (PMC Bank) was placed under restrictions after financial irregularities, including the underreporting of bad loans, were uncovered. Eventually, PMC Bank was acquired by Centrum Financial Services under the supervision of the RBI.
What Lies Ahead for New India Co-operative Bank?
The RBI will continue to monitor New India Co-operative Bank’s financial position and take appropriate steps based on future developments. For now, depositors are protected, and the bank’s operations will be closely supervised. The central bank’s proactive measures aim to ensure financial stability while safeguarding public interests.
Stay updated with the latest news on RBI regulations and the financial sector.
The Hindustan Herald Is Your Source For The Latest In Business, Entertainment, Lifestyle, Breaking News, And Other News. Please Follow Us On Facebook, Instagram, Twitter, And LinkedIn To Receive Instantaneous Updates. Also Don’t Forget To Subscribe Our Telegram Channel @hindustanherald
