New India Co-op Bank crisis: RBI allows ₹25,000 withdrawals in partial relief for depositors

The Reserve Bank of India (RBI) on Monday permitted depositors of the crisis-hit New India Co-operative Bank Limited to withdraw up to ₹25,000 from their accounts, providing partial relief amid ongoing restrictions.

The central bank had imposed All-Inclusive Directions (AID) on February 13, prohibiting any withdrawals from savings, current, or other deposit accounts due to supervisory concerns. A day later, RBI superseded the bank’s board and appointed an Administrator along with a Committee of Advisors (CoA) to oversee its functioning.

“The Reserve Bank, after reviewing the bank’s liquidity position in consultation with the Administrator, has decided to allow a deposit withdrawal of upto ₹25,000 (Rupees Twenty Five Thousand only) per depositor, with effect from February 27, 2025,” RBI said in a statement.

The regulator stated that the relaxation would enable more than 50% of the depositors to withdraw their entire balances, while the remaining account holders can access up to ₹25,000 or their available balance, whichever is lower. Withdrawals can be made through branches and ATMs of the bank.

The RBI also reconstituted the Committee of Advisors (CoA) to assist the Administrator, effective February 25. The restructured panel now includes Ravindra Sapra, former General Manager of State Bank of India; Ravindra Tukaram Chavan, former Deputy CGM of Saraswat Co-operative Bank Ltd; and Anand M Golas, Chartered Accountant.

The RBI reiterated that it is closely monitoring the situation and will take necessary steps to safeguard the interests of depositors.

The regulatory actions came after concerns were raised over the bank’s financial health and governance. The bank was barred from granting loans, making investments, accepting fresh deposits, or disbursing payments without prior RBI approval under Section 35A read with Section 56 of the Banking Regulation Act, 1949.

The law enforcement agencies have initiated a probe into allegations of fund embezzlement at the bank. Mumbai Police have registered a case against its General Manager and Head of Accounts, Hitesh Mehta, and his associates for allegedly misappropriating Rs 122 crore. The case has been transferred to the Economic Offences Wing (EOW) for further investigation.