RBI supersedes New India Cooperative Bank board, appoints administrator amid fund misuse allegations
Mumbai: The Reserve Bank of India (RBI) on Friday took control of the board of Mumbai-based New India Cooperative Bank for a year and appointed former SBI chief general manager Shreekant as the administrator to oversee its operations, media reports said.
To support the administrator, the RBI has also formed a ‘Committee of Advisors,’ including former SBI general manager Ravindra Sapra and chartered accountant Abhijeet Deshmukh.
This action follows the RBI’s decision a day earlier to halt new loan issuance and freeze deposit withdrawals for six months, effective February 13, citing supervisory concerns linked to recent developments.
The measures, according to the central bank, are aimed at safeguarding depositor interests.
The bank’s chief compliance officer lodged a complaint with Mumbai Police’s Economic Offences Wing (EOW) on Thursday, following an RBI spot inspection.
The administrator has been tasked with swiftly assessing the situation and working towards reviving normal banking operations.
On Friday, an RBI team engaged in discussions with senior bank officials at the bank’s Prabhadevi headquarters, which was under heavy security. Business Standard observed a small police contingent deployed at the premises as a precautionary measure.
Depositor Concerns and financial standing
Customers at the bank’s branches voiced anxiety over their savings, leading to a sense of panic.
However, sources noted that around 90% of the bank’s 130,000 depositors were fully covered under deposit insurance schemes.
As of March 2024, the bank’s total deposits amounted to Rs 2,436.37 crore, comprising 27.95% savings deposits, 4.23% current account deposits, and 67.82% term deposits.
Despite the restrictions, the RBI has allowed the bank to cover essential expenses, including employee salaries, rent, and utility bills.
The central bank clarified that these curbs should not be seen as a licence cancellation.
“The bank will continue to operate under the imposed restrictions until its financial health improves,” the RBI stated, adding that it would modify its directives as needed to protect depositors.
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