The Reserve Bank of India (RBI) has imposed strict restrictions on Mumbai-based New India Co-operative Bank due to concerns over its financial stability.
As a result, customers are unable to withdraw their funds, and the bank has been prohibited from issuing new loans or accepting deposits. However, depositors remain protected under the Deposit Insurance Scheme, which guarantees coverage of up to Rs 5 lakh in case of a bank failure.
Effective from February 13, 2025, the RBI has placed multiple restrictions on the bank. It is now barred from granting new loans or renewing existing ones; accepting fresh deposits or making new investments; processing any payments or financial transactions; and selling or transferring any of its assets.
These measures will remain in force for at least six months, during which time the bank's financial condition will be closely monitored.
The central bank’s decision stems from concerns about the financial health of New India Co-operative Bank.
The RBI has raised doubts about the bank’s liquidity and ability to meet its obligations. As a precautionary step, customers have been restricted from withdrawing money from their savings, current, or any other accounts. The RBI clarified that these actions are intended to safeguard the interests of depositors and maintain financial stability.
As news of the RBI’s restrictions spread on Friday, anxious customers rushed to the bank’s branches, hoping to withdraw their money. However, they were met with closed doors, leaving them frustrated and uncertain about their savings.
Several images and videos circulating on social media depict large crowds gathered outside the bank’s premises, unable to access their funds. The sudden freeze on withdrawals has triggered widespread concern among account holders.