Big news for bank customers. The Reserve Bank of India (RBI) has put some serious restrictions on New India Co-operative Bank, which is based in Mumbai. This is going to hit the bank’s customers hard, as they won’t be able to access their savings.
Effects of the RBI Restrictions
With the RBI’s ban, New India Co-operative Bank can’t issue any loans or accept new deposits. This restriction kicks in on February 13, 2025, and will last for six months. Customers will face difficulties since they won’t be able to withdraw their funds during this period. However, the RBI will be monitoring the bank closely and might offer some relief once the ban is lifted.
What the RBI Said About the Restrictions
In their announcement, the RBI mentioned, “Considering the current liquidity situation, the bank has been directed to prevent any withdrawals from savings, current, or other accounts.” The bank can, however, offset loans against deposits as long as it follows RBI’s guidelines. Additionally, the bank is allowed to cover essential expenses like salaries, rent, and utility bills.
RBI has decided to impose a ban because it discovered some serious issues with how New India Co-operative Bank was operating. To safeguard depositors’ interests, they’ve put strict restrictions on the bank. They made it clear that after the bank shuts down its business on February 13, 2025, it won’t be able to issue or renew any loans without RBI’s approval.
So, what does this mean for the customers? According to RBI’s orders, customers won’t be able to withdraw their deposits anymore. If the RBI finds a way to help the bank after their investigation, then customers might be able to access their funds. If not, depositors will be eligible for an insurance claim of up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).