RBI Takes Control of New India Cooperative Bank Amid Governance Concerns

The Reserve Bank of India has overhauled the Board of Directors of New India Cooperative Bank Ltd for poor governance. Former SBI manager Shreekant is appointed as Administrator to manage the bank and guide it through restrictions, including stopping withdrawals and fresh loans, while safeguarding depositor interests.

The Reserve Bank of India (RBI) has intervened in the operations of New India Cooperative Bank Ltd, Mumbai, citing governance concerns as the catalyst for this move. In a statement released on Friday, the central bank announced the dissolution of the bank's Board of Directors for a duration of 12 months.

As a result, the RBI has appointed Shreekant, an experienced former Chief General Manager of State Bank of India (SBI), to serve as the 'Administrator' to oversee the bank's affairs during this period. To aid Shreekant, the RBI appointed a 'Committee of Advisors' comprising Ravindra Sapra and Abhijeet Deshmukh, bringing expertise from SBI and accounting.

The RBI's directive sparked a surge of customers to the bank's branches in Mumbai, seeking to safeguard their savings amid restrictions placed on the bank. Withdrawals are curtailed, while new loans and investments are halted, allowing only essential expenses as prescribed by the RBI. The central bank's action aims to protect depositor interests in light of the bank's liquidity challenges.