The Reserve Bank of India (RBI) has restricted New India Co-operative Bank Limited, Mumbai, from issuing new loans, accepting deposits, or allowing withdrawals for six months due to financial health concerns.
The bank requires RBI’s prior approval for any financial activities from February 13, 2025.
The central bank said the decision was taken due to concerns over the bank’s financial health and liquidity.
In its notice, the RBI said, “It is hereby notified for information of the public that… the Reserve Bank of India (RBI) … has issued certain Directions to New India Co-operative Bank Limited, Mumbai (“the bank”), whereby, as from the close of business on February 13, 2025, the bank shall not, without prior approval of RBI in writing, grant or renew any loans and advances, make any investment, incur any liability including borrower of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in the discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI Direction dated February 13.”
The RBI’s move comes after what it called “recent material developments” at the bank. Although the central bank did not provide specific details, it stated that these directions were issued to protect depositors’ interests.
New India Co-operative Bank has been struggling with financial losses in recent years. According to its annual report, the bank recorded a loss of Rs 227.8 million in the financial year ending March 2024, following a loss of Rs 307.5 million in the previous year.
The bank’s loan book shrank to Rs 11.75 billion as of March 31, 2024, down from Rs 13.30 billion a year earlier. However, deposits showed a slight increase, rising to Rs 24.36 billion from Rs 24.06 billion in the same period.
Despite these restrictions, the RBI clarified that this does not mean the bank’s licence has been cancelled. The central bank will continue to monitor its financial condition and take necessary actions based on developments.
This is not the first time the RBI has taken strict action against a cooperative bank. In 2019, it imposed restrictions on Punjab and Maharashtra Co-operative Bank (PMC Bank) after uncovering financial irregularities, including under-reporting of bad loans. Later, Centrum Financial Services took over PMC Bank under RBI’s supervision.
