MUMBAI: A day after banning it from giving out new loans and from taking deposits and also banning its depositors from taking out their money for the next six months, the Reserve Bank has sacked the board of the city-based New India Co-operative Bank and has appointed Shreekant, former chief general manager of State Bank as the administrator.
In an order dated February 13, the RBI said, “from the close of business on February 13, 2025, the bank shall not, without prior approval of RBI in writing, grant or renew any loans/advances, make any investment, incur any liability including borrowing funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations, or sell, transfer or otherwise dispose of any of its properties or assets.”
The said order was also released to the public only Friday.
It further said given poor liquidity position of the bank, it 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 for the next six months.”
"The bank may incur expenditure in respect of certain essential items such as salaries of employees, rent, electricity bills etc, as specified in the said directions."
These directions are necessitated due to supervisory concerns emanating from the recent material developments in the bank, and to protect the interest of depositors of the bank.
”The eligible depositors would be entitled to receive deposit insurance claim amount of their deposits up to a Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC), it said further, adding the bank will continue to undertake banking business subject to restrictions specified in the said directions till its financial position improves.“
The Reserve Bank has today superseded the board of directors of New India Cooperative Bank, Mumbai, for a period of 12 months. Consequently, the Reserve Bank has appointed Shreekant, former chief general manager of State Bank of India (SBI) as the administrator to manage the affairs of the bank during this period,” the RBI said on Friday.
The central bank further said it has also appointed a committee of advisors -- Ravindra Sapra (former general manager, SBI) and Abhijeet Deshmukh (a chartered accountant)-- to assist the administrator in discharging his duties.
“The above action is necessitated due to certain material concerns emanating from poor governance standards observed in the bank, it said.
New India Co-operative Bank has been grappling with losses for the past two fiscals. It posted a loss of Rs 23 crore in financial year 2024, it advances came down to Rs 1,175 crore from Rs 1,330 crore a year earlier. Its deposits rose to Rs 2,436 crore from Rs 2,406 crore.
It can be noted that January 27, 2025, the Reserve Bank had superseded the board of Gurugram based Aviom India Housing Finance and within a week took the company to NCLT insolvency proceedings.
The RBI's action was based on recommendations from the National Housing Bank after statutory auditors found discrepancies in its books of accounts and also many defaults.