RBI supersedes board of Mumbai-based New India Co-op Bank

Mumbai: A day after imposing several restrictions on city-based New India Co-operative Bank, the RBI on Friday superseded its board citing poor governance standards.

A large number of bank's customers had gathered at its branches on Friday following RBI's restrictions, which included a bar on issuing new loans and suspension of deposit withdrawals for six months. The bank has 28 branches, mostly located in the Mumbai region.

In a statement, the Reserve Bank of India (RBI) said it has appointed Shreekant, a former chief general manager of State Bank of India (SBI) as ‘Administrator’ to manage the affairs of the bank.

The Board of Directors of New India Co-operative Bank, Mumbai, has been superseded for 12 months, the RBI said in a statement.

It has also appointed 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).

"The action is necessitated due to certain material concerns emanating from poor governance standards observed in the bank," it said.

On Thursday, the RBI had imposed several restrictions on the lender including on withdrawal of funds by depositors, amid supervisory concerns.

The restrictions came into force from the close of business on Thursday and would remain in force for a period of six months and are subject to review.

"Considering the bank's present liquidity position, the bank has been directed not to allow withdrawal of any amount from savings bank or current accounts or any other account of a depositor...," the RBI said while imposing the restrictions.

The lender, however, has been allowed to set off loans against deposits subject to the conditions stated in the RBI directions. It may incur expenditure in respect of certain essential items such as salaries of employees, rent, and electricity bills.

The RBI further said as from the close of business on February 13, 2025, the bank shall not, without prior approval, grant or renew any loans and advances, make any investment, and incur any liability, including acceptance of fresh deposits.

It further said the directions 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.

Further, eligible depositors would be entitled to receive deposit insurance claim amount of their deposits up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).