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The banking sector regulator Reserve Bank of India (RBI) has imposed several restrictions on the functioning of the Mumbai-based New India Co-operative Bank. This will have the biggest impact on the customers of the bank, who will no longer be able to withdraw their hard-earned money.

Effect of RBI ban

After the ban by RBI, New India Co-operative Bank will no longer be able to give any loans or take any deposits. This ban has come into effect from 13 February 2025 for the next six months. This will also cause trouble to the customers, as they will no longer be able to withdraw their money deposited in their bank. However, during this time RBI will closely examine the functioning of the bank and it can also give necessary concessions after the ban period ends.

What did RBI say about the ban?

RBI said in its statement, "Keeping in view the existing cash (liquidity), the bank has been directed not to allow any depositor to withdraw money from a savings account, current account, or any other account." However, the bank is allowed to set off the loan against the deposit amount, provided it is as per the instructions issued by the RBI. Apart from this, the bank can spend on essential things like salary, rent, and electricity bills.

Why did RBI impose a ban?

RBI says that it has found serious flaws in the functioning of the New India Co-operative Bank. It has issued instructions to impose strict restrictions on the bank to protect the interests of the depositors. RBI has clarified that after the closure of the business of the bank on February 13, 2025, the bank will not give or renew any loan or advance amount without its permission.

What will happen to the customers now?

According to the instructions of RBI, the customers of New India Co-operative Bank will no longer be able to withdraw their deposits. If RBI gives any relief to the bank after investigation, then the customers will be able to withdraw their money. In case this does not happen, the depositors will get an insurance claim of up to Rs 5 lakh on their deposits. This claim will be received from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

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