Co-operative Bank Crisis Deepens: New India Bank Scam Exposes Sector Vulnerabilities

The arrest of New India Cooperative Bank's former GM Hitesh Mehta for allegedly embezzling ₹122 crore has reignited concerns about the co-operative banking sector's stability. The RBI has imposed withdrawal restrictions and superseded the bank's board, echoing the 2019 PMC Bank crisis. This incident has prompted discussions about raising the deposit insurance limit beyond ₹5 lakh. Experts warn that co-operative banks may offer slightly higher interest rates but carry significant risks. The government is considering stricter regulations to protect depositors, as the sector grapples with fraud, mismanagement, and weak oversight.

 

Sources: Business Standard, India TV News, Mid-Day