Turmoil at New India Cooperative Bank: RBI Steps In

Following business restrictions, the Reserve Bank of India superseded the New India Cooperative Bank's board, appointing an administrator to oversee recovery. Faced with governance issues, the bank's customers struggle to access funds. The majority of depositors are insured for returns; however, unrest mounts as financial mismanagement details surface.

The New India Cooperative Bank, headquartered in the city, is facing significant governance issues, leading to the Reserve Bank of India (RBI) taking decisive action. On Thursday, the RBI imposed business restrictions on the bank, and by Friday, it superseded the bank's board, appointing Shreekant, a former chief general manager of SBI, as the administrator to guide its revival.

Reports have emerged highlighting major lapses, including potential misappropriation of funds by some staff. Despite the lack of clarity on the full extent of this financial mismanagement, depositors eagerly swarm the bank's branches, only to be refused entry and denied access to their savings, fuelling customer dissatisfaction.

However, 90% of the depositors are covered under deposit insurance up to Rs 5 lakh, ensuring they receive their full deposits. The RBI's intervention comes amid noticeable decreases in the bank's assets and an increase in non-performing assets, with ongoing measures in place to restrict transactions and protect depositor interests until further notice.