In the interest of depositors, the Reserve Bank of India has allowed withdrawal of up to Rs 25,000 per depositor of New India Co-operative Bank, the central bank said in a press release. This will be with effect from Feb. 27.
This has come after the Reserve Bank of India on Feb. 14 imposed business restrictions on New India Co-operative Bank and superseded the bank's board due to concerns over poor governance.
This action came a day after the RBI imposed several restrictions on the bank, including a six-month ban on issuing new loans and suspending deposit withdrawals.
RBI took this decision after assessing the bank's liquidity position in consultation with the administrator. With this move, more than 50% of total depositors will be able to withdraw their entire balances, RBI said.
The rest of the depositors can draw up to Rs 25,000 from their deposit accounts, it said. Additionally, the central bank has also reconstituted the committee of advisors to the administrator with effect from Feb. 25.
The committee will now include Ravindra Sapra, former General Manager of State Bank of India; Ravindra Tukaram Chavan, former Deputy CGM of Saraswat Co-operative Bank; and Anand M. Golas, Chartered Accountant.
There will be no change in the appointment of administrator Shreekant, a former chief general manager of SBI.
On the development, RBI said that it is closely monitoring the situation and will continue to take necessary steps in the interest of the depositors of the bank.
So far reports said that Economic Offences Wing of the Mumbai Police arrested Abhimanyu Bhoan, former Chief Executive Officer of New India Cooperative Bank in connection with embezzlement of Rs 122 crore from the bank's safe.
The police have also arrested Hitesh Mehta, the former general manager, and his accomplice Dharmesh Paun, a developer, who helped him route the money.
This has yet again brought to light the poor health of urban cooperative banks in India, the difficulties these banks face, and the policy endeavours that must be geared to consolidate and strengthen this sector.
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