RBI Enforces Restrictions on New India Co-operative Bank Amid Liquidity Concerns

The Reserve Bank of India (RBI) has imposed restrictions on the New India Co-operative Bank in Mumbai due to supervisory concerns about its liquidity position. These include a freeze on withdrawals and prohibitions on granting new loans or investments. RBI's measures aim to protect depositors.

The Reserve Bank of India (RBI) has clamped down on New India Co-operative Bank, imposing stringent restrictions on the Mumbai-based institution. These measures, effective from Thursday, are anticipated to last for six months, during which time withdraws are halted due to the bank's liquidity issues.

The move, according to the RBI, is to protect depositors and tackle the lender's current supervisory concerns. The bank cannot permit any withdrawal from savings or current accounts but can set off loans against deposits under specified conditions.

Further, the bank is barred from granting or renewing loans, making new investments, or incurring additional liabilities without prior approval. Moreover, depositors could recover up to Rs 5 lakh through the Deposit Insurance and Credit Guarantee Corporation.

(With inputs from agencies.)