RBI Eases Withdrawal Restrictions on New India Co-operative Bank

The Reserve Bank of India (RBI) has partially eased withdrawal restrictions on New India Co-operative Bank, allowing customers to withdraw up to ₹25,000 from their deposit accounts starting February 27, 2025. This follows the imposition of All-Inclusive Directions (AID) on February 13 due to supervisory concerns.

RBI’s Initial Restrictions and Management Changes

On February 13, 2025, the RBI imposed restrictions on Mumbai-based New India Co-operative Bank, prohibiting deposit withdrawals to safeguard depositors’ interests. The central bank cited supervisory concerns stemming from recent material developments within the bank. Following this, RBI superseded the Board of Directors for a year and appointed Shreekant, former Chief General Manager of the State Bank of India (SBI), as Administrator to oversee the bank’s operations.

To support the Administrator, the RBI also constituted a Committee of Advisors (CoA). Initially formed with specific members, the CoA was later restructured on February 25, 2025, comprising Ravindra Sapra (former General Manager, SBI), Ravindra Tukaram Chavan (former Deputy CGM, Saraswat Co-operative Bank), and Anand M Golas (a chartered accountant).

Relaxation of Withdrawal Limits and Future Oversight

After reviewing the bank’s liquidity position with the Administrator, the RBI decided to allow deposit withdrawals of up to ₹25,000 per depositor from February 27. This relaxation enables over 50% of depositors to withdraw their entire balances, while the rest can access up to ₹25,000, depending on their account balance. Withdrawals can be made via bank branches or ATMs, subject to the stated limits.

The restrictions, initially imposed for 6months, will remain in effect until further review. Meanwhile, the RBI has assured close monitoring of the bank’s operations. Additionally, eligible depositors can claim up to ₹5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC) under the deposit insurance scheme.

Conclusion

The RBI’s decision to ease withdrawal limits provides relief to a significant number of New India Co-operative Bank’s depositors. While restrictions remain in place, the central bank continues to oversee the bank’s functioning to ensure financial stability and depositor protection.

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