New India Co-op Bank faces several RBI restrictions; know what happens to your deposits, withdrawals, loans, lockers

The Reserve Bank of India (RBI) has imposed various restrictions on the New India Co-operative Bank citing supervisory concerns. Long queues of customers were seen outside one branch of the Mumbai-based bank on Friday as they sought to withdraw their money. Read on to know how this will impact the bank’s customers.

What are the RBI restrictions?
According to the RBI curbs, the bank cannot allow customers to withdraw money from their savings or current accounts.

The bank has also been barred from issuing fresh loans, renewing advances, and accepting new deposits. 

Customers can, however, request the bank to set off their outstanding loans against deposits. They can also access digital banking services such as internet banking, UPI, NEFT, and RTGS.

Besides, customers are allowed to access their lockers using coupons issued by the bank.

These restrictions came into effect from the end of business hours on Thursday (13 February) and will remain in force for a period of six months, subject to the RBI’s review.

Why did RBI impose these curbs?
The RBI has raised concerns over the liquidity position of the bank, i.e., its ability to meet immediate liabilities. The Co-op Bank also incurred huge losses in recent years. It reported losses of Rs 22.78 crore in the Financial Year 2023-2024 and Rs 30.75 crore the previous financial year.

"In view of the current liquidity position of the bank, the bank is directed not to permit withdrawal of any amount from the savings bank or current account or any other account of the depositors." the RBI said in a statement.

“These directions are necessary to address supervisory concerns arising out of recent significant developments in the bank and to protect the interests of the bank's depositors,” it added.

Is there any respite for customers?
Reportedly, eligible depositors will be entitled to receive deposit insurance claim amount on their deposits up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).