RBI Orders Halt on Financial Operations of New India Co-operative Bank

RBI Orders Halt on Financial Operations of New India Co-operative Bank

The Reserve Bank of India (RBI) has issued a notice to New India Co-operative Bank, Mumbai, restricting it from granting new loans, accepting deposits, or allowing withdrawals for the next six months. The central bank’s decision follows concerns over the bank’s financial health and liquidity.

In the notice, RBI stated that from the close of business on February 13, 2025, the bank must seek prior written approval from the RBI before engaging in activities such as granting or renewing loans, making investments, incurring liabilities (including borrowing funds), accepting new deposits, making payments, or selling or transferring its assets.

This action follows what the RBI referred to as “recent material developments” at the bank. While the central bank did not specify further details, it emphasized that these measures were taken to safeguard depositors' interests.

New India Co-operative Bank has faced financial difficulties in recent years, posting a loss of Rs 227.8 million for the financial year ending March 2024, following a loss of Rs 307.5 million the previous year. Its loan portfolio decreased to Rs 11.75 billion by March 2024, from Rs 13.30 billion a year earlier. However, its deposits increased slightly, rising to Rs 24.36 billion from Rs 24.06 billion.

Despite the restrictions, the RBI clarified that the bank’s licence remains intact. The RBI will continue to monitor the bank’s financial condition and take further action as needed.

This is not the first time the RBI has imposed stringent measures on a co-operative bank. In 2019, the RBI imposed similar restrictions on Punjab and Maharashtra Co-operative Bank (PMC Bank) after uncovering financial irregularities, including the under-reporting of bad loans. PMC Bank was later taken over by Centrum Financial Services under RBI supervision.

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