RBI Supersedes New India Co-Operative Bank’s Board for 12 Months

Mumbai: A day after imposing restrictions on Mumbai-based New India Co-operative Bank, the Reserve Bank of India (RBI) on Friday superseded its Board of Directors for 12 months citing poor governance at the bank.

The central bank appointed Shreekant, former chief general manager of State Bank of India (SBI) as ‘Administrator’ to manage the affairs of the bank during this period besides also appointing a ‘Committee of Advisors’ to assist the Administrator in discharging his duties. The members of the Committee of Advisors are Ravindra Sapra (former general manager, SBI) and Abhijeet Deshmukh (chartered accountant).

A day earlier, the RBI had imposed a host of restrictions on the bank including a six-month freeze on withdrawals due to liquidity concerns. Depositors cannot access their savings, current, or other accounts, though the bank has been allowed to set off loans against deposits and cover essential expenses such as employee salaries, rent, and utility bills.

The RBI stated that the bank cannot grant or renew loans, make new investments, dispose any of its properties or accept fresh deposits without prior approval. However, it said that eligible depositors could claim up to Rs 5 lakh from the Deposit Insurance and Credit

Guarantee Corporation (DICGC), an RBI subsidiary. The move sparked panic amongst the bank’s depositors who were seen standing in long queues outside the bank’s branch in Mumbai to withdraw their funds.

These directions against the Bank were necessitated due to supervisory concerns emanating from the recent material developments in the bank, and to protect the interest of depositors of the bank, the RBI said.

According to New India Co-operative’s annual report, the bank made a loss of Rs 22.78 crore in FY24, compared to a loss of Rs 30.75 crore in the previous fiscal. Its loan book also shrunk from Rs 1175 crore in FY24 from Rs 1330 crore in the year-ago period.