RBI action on this bank, bans transactions, customers are unable to withdraw money
The Reserve Bank of India (RBI) has taken a major action and imposed strict restrictions on Mumbai-based New India Co-operative Bank. This decision has been taken in view of the deteriorating financial condition of the bank. These restrictions have come into effect from the close of business on Thursday, 13 February 2025 and will continue for the next six months.
This action has affected millions of customers of the bank, who are no longer allowed to withdraw money from their accounts.
Central bank banned Mumbai-based New India Co-operative Bank
Most of the people gathered outside the bank are senior citizens. Bank officials have given coupons to the people standing in the queue. According to them, customers can use these coupons to access their lockers. The Reserve Bank of India's directions to New India Co-operative Bank, Mumbai came into effect from the close of business on Thursday and will remain in force for a period of six months and will be subject to review.
New India Co-operative Bank has been struggling with losses for the last two financial years. According to the bank's annual report, the bank is estimated to have a loss of Rs 227.8 million in the financial year ending March 2024 and a loss of Rs 307.5 million in FY 2023.
Customer trouble: Long queues outside the bank
Since Friday morning, a huge crowd of customers was seen outside various branches of the bank. Hundreds of people gathered outside the Vijayanagar branch in Andheri, Mumbai, hoping to withdraw their money. Most of the customers were senior citizens, who were worried about their life savings. Bank officials tried to convince the people, but there was an atmosphere of chaos.
RBI restrictions details
Restrictions imposed by RBI include several important aspects:
Customers cannot withdraw any amount from their accounts.
Bank cannot give new loans nor renew old loans.
Accepting new deposits has been banned.
The bank cannot make any kind of new investment.
Also Read: New Income Tax Bill 2025: How It Will Simplify Taxation for Indians
However, the daily operations of the bank such as payment of salaries of employees, rent and electricity bills have been allowed.
Bank's financial condition: Loss-making business
New India Co-operative Bank was struggling with financial crisis for the last few years. The bank had a loss of about Rs 23 crore in the financial year ended March 2024, while the loss was Rs 31 crore in the previous year. The bank's capital adequacy ratio was also running below regulatory requirements. Due to these reasons, RBI had to take this tough step.
RBI review and possible solutions
RBI has said that it will review the bank's position after six months. During this time the bank will be given a chance to improve its financial position. If the bank is successful in improving its position, the restrictions can be lifted. However, if the situation does not improve, RBI may have to take more stringent steps.
Summary
RBI imposed several restrictions on Mumbai-based New India Co-operative Bank amid supervisory concerns, including a ban on withdrawal of depositors' money. After this, queues of people were seen outside the Mumbai-based New India Co-operative Bank, as worried customers want to withdraw their money.
Some people even said that the bank is not answering their questions and even its customer support services and apps are not working.
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