Panic at New India Co-operative Bank as RBI Imposes Restrictions

The Reserve Bank of India (RBI) has placed stringent restrictions on the New India Co-operative Bank in Mumbai, causing alarm among its depositors. Starting February 13, 2025, the bank will not be able to issue loans, accept deposits, or permit withdrawals for a period of six months due to concerns over its financial stability. This has led to customers flocking to branches throughout Mumbai to withdraw their cash and valuables, resulting in long lines.  Depositors voiced their frustration over the unexpected freeze, with many anxious about how to manage their daily expenses and meet their EMI obligations. The RBI has reassured customers that deposits up to ₹5 lakh are protected under the Deposit Insurance Scheme. Nevertheless, customers are still on edge due to the limited access to their funds.  While the bank is allowed to cover essential expenses such as salaries and rent, it cannot engage in new investments or sell assets without prior approval from the RBI. This situation is reminiscent of previous financial crises, such as the collapse of PMC Bank. Customers are calling for improved communication and longer hours to access their lockers and savings.

Source: NDTV, Times Of India, Indian Express