RBI Supersedes Board Of New India Co-operative Bank Following Governance Concerns
The board of directors of New India Co-operative Bank, Mumbai, has been superseded for 12 months.
A day after implementing several restrictions on the New India Co-operative Bank, the RBI superseded its board on Friday due to poor governance standards.
Many of the bank's customers gathered at its branches after the RBI's restrictions, which included a ban on issuing new loans and a suspension of deposit withdrawals for six months. The bank operates 28 branches, mostly in the Mumbai region.
The Reserve Bank of India announced that it has appointed Shreekant, a former chief general manager of the State Bank of India, as the administrator to manage the bank's affairs.
The board of directors of New India Co-operative Bank, Mumbai, has been superseded for 12 months, according to the RBI's statement.
Additionally, a 'Committee of Advisors' has been appointed to assist the Administrator in his duties. The Committee of Advisors includes Ravindra Sapra (former General Manager, SBI) and Abhijeet Deshmukh (chartered accountant).
"The action is necessitated due to certain material concerns emanating from poor governance standards observed in the bank," it said.
On Thursday, the RBI imposed several restrictions on the lender, including a limit on fund withdrawals by depositors, due to supervisory concerns.
The restrictions took effect at the end of business on Thursday and will remain in place for six months, subject to review.
"Considering the bank's present liquidity position, the bank has been directed not to allow withdrawal of any amount from savings bank or current accounts or any other account of a depositor...," the RBI said while imposing the restrictions.
The lender has been permitted to offset loans against deposits, subject to the conditions outlined in the RBI directives. It may also incur expenses for essential items such as employee salaries, rent, and electricity bills.
Additionally, the RBI stated that, effective from the close of business on February 13, 2025, the bank shall not, without prior approval, grant or renew any loans and advances, make any investments, or incur any liabilities, including accepting new deposits.
It further said the directions were necessitated due to supervisory concerns emanating from the recent material developments in the bank, and to protect the interest of depositors of the bank.
Further, eligible depositors would be entitled to receive deposit insurance claim amount of their deposits up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corp.
(With PTI Inputs)
