A large number of the bank's customers had gathered at its branches on Friday following RBI's restrictions, which included a bar on issuing new loans and suspension of deposit withdrawals for six months
PIC/NIMESH DAVE
A day after imposing several restrictions on Mumbai-based New India Co-operative Bank, the Reserve Bank of India (RBI) on Friday superseded its board citing poor governance standards, news agency PTI reported.
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A large number of the bank's depositors had gathered at its branches on Friday following RBI's restrictions, which included a bar on issuing new loans and suspension of the deposit withdrawals for six months. The bank has 28 branches, mostly located in the Mumbai region.
In a statement, the RBI said that it has appointed Shreekant, a former chief general manager of the State Bank of India (SBI) as an 'Administrator' to manage the affairs of the bank, PTI reported.
The Board of Directors of New India Co-operative Bank, Mumbai, has been superseded for 12 months, the statement further explained.
The central bank has also appointed a 'Committee of Advisors' to assist the Administrator in discharging his duties, PTI reported. The members of the Committee of Advisors are Ravindra Sapra, the former general manager of SBI) and chartered accountant Abhijeet Deshmukh.
"The action is necessitated due to certain material concerns emanating from poor governance standards observed in the bank," it said.
On Thursday, the RBI had imposed several restrictions on the lender including on withdrawal of funds by depositors, amid supervisory concerns.
The restrictions came into force from the close of business on Thursday and would remain in force for a period of six months and are 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 financial institution, however, has been allowed to set off loans against deposits, subject to the conditions stated in the RBI directions. It may incur expenditure in respect of certain essential items such as salaries of employees, rent, and electricity bills.
The RBI further said that as 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 investment, and incur any liability, including acceptance of fresh deposits.
It further that said the directions were necessitated owing to supervisory concerns emanating from the recent material developments in the bank, and to protect the interest of its depositors.
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 Corporation (DICGC).
(With PTI inputs)
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