RBI Replaces Board Of New India Cooperative Bank

Reserve Bank of India (RBI) has exercised tight measures on New India Cooperative Bank Ltd., headquartered in Mumbai, replacing its Board of Directors for 12 months. This order, placed in exercise under Section 36AAA read with Section 56 of the Banking Regulation Act, 1949 (applicable to cooperative societies), stems from governance issues within the bank.

The RBI has further authorized Shreekant, former Chief General Manager, State Bank of India (SBI), to be the Administrator to continue the business of the bank during this interim period. The RBI has also constituted a Committee of Advisors to advise to monitor the affairs of the bank, and they are Ravindra Sapra (former General Manager, SBI) and Abhijeet Deshmukh (Chartered Accountant).

The action is under close supervision by the central bank to limit the lender from making new loans and withdrawal deposits for six months on supervisory issues and liquidity issues. The controls, exercised under Section 35A of the Banking Regulation Act, 1949, were made in a February 13, 2025, press release.

Deposit Withdrawal Ban Sparks Anxiety

On Feb 14, a day after RBI had made a point, there were anxious customers queuing up outside New India Cooperative Bank branches in Mumbai waiting to receive their deposits back. Since the bank was not allowed to allow withdrawals for six months, the owners of the accounts were anxious about their money.

Financial Difficulty and Governance Trouble

The RBI move comes after the bank's financial position weakened in the last two years. The New India Cooperative Bank, in its latest annual report, reported a net loss of Rs 23 crore in fiscal March 2024, compared with a loss of Rs 31 crore in the previous fiscal year. The deposits increased modestly to Rs 2,436 crore from Rs 2,406 crore.

Seema Waghmare, a customer of the New India Co-operative Bank, told ANI (according to a social media post uploaded by ANI on their official X handle), "We deposited money just yesterday, but they did not say anything... They should have told us that this was going to happen... They are saying that we will get our money within 3 months... We have EMIs to pay, we have no idea how we will do all of that..."

RBI, without revealing the nature of governance defaults, said that "recent material developments" led to action for the preservation of depositors' interest. 

Since the bank has been put into the care of the Administrator nominated by the RBI, stabilizing the operations and rectifying financial misdeeds will be the first priority. The process will be facilitated by the Committee of Advisors. But for the depositors, the issue at hand is getting access to their money in the short run.