RBI's Heavy Hand on New India Co-operative Bank: Fund Misappropriation Under Fire

The RBI has taken decisive action against New India Co-operative Bank due to misappropriation of funds by staff members. Over 90% of depositors will receive up to Rs 5 lakh through deposit insurance. The RBI has superseded the bank's board, appointed an administrator, and imposed restrictions, aiming for a swift revival.

The Reserve Bank of India (RBI) has moved decisively against the New India Co-operative Bank following allegations of fund misappropriation by its staff, sources revealed on Friday.

The central bank has blocked new loans and suspended deposit withdrawals, with deposit insurance guaranteeing up to Rs 5 lakh for over 90% of the bank's 1.3 lakh depositors. RBI has replaced the bank's board with an administrator and a committee to restore normalcy swiftly.

Originally founded in 1968, the bank's operations have come under scrutiny due to increased non-performing assets and a slight rise in its deposit base. RBI's action underscores concerns over the bank's governance standards and is a significant step in ensuring operational integrity.