RBI Considers Relief for New India Co-op Bank Depositors: Report

Photo : Reuters

The Reserve Bank of India (RBI) is working on a plan to help depositors of the New India Co-operative Bank take money out of their accounts in case of emergencies, like medical issues or personal problems, according to two sources.

The RBI, along with the bank's manager, will ask depositors to show proof of the emergency. They will allow people to take out money up to ₹5,00,000 (around $5,761), the sources said. These sources didn’t want to be named as they are not allowed to talk to the media.

Currently, if a bank fails, deposits up to ₹5,00,000 are protected by insurance. This money should be paid to depositors within 90 days.

The New India Co-operative Bank has been facing losses for the past two years. According to its report, it lost ₹227.8 million in 2024 and ₹307.5 million in 2023. The bank had ₹24.36 billion in deposits and ₹11.75 billion in loans as of March 31, 2024.

Last week, the RBI stopped the bank from giving out new loans and also stopped people from withdrawing money for six months. The RBI said the bank is facing serious money problems and appointed a new manager to oversee its operations. It is not clear if the bank will reopen after six months.

This action by the RBI is similar to what happened with other banks in the past. For example, the Punjab and Maharashtra Co-operative Bank was banned in 2019 because of money problems. That bank later merged with Unity Small Finance Bank in 2022.

The government increased the amount of insurance for deposits to ₹5,00,000 in 2020. There are talks about increasing the insurance amount again.

Over the weekend, depositors of the bank met in Mumbai to talk about legal steps they can take. One depositor, Uttam Agami, is a 66-year-old retiree who has ₹1.1 million in the bank. Agami, who had his leg amputated due to diabetes two years ago, said he depends on his bank deposits to pay for his medical bills and other expenses. He is worried because he might not be able to access his money.

More than 90% of the bank’s depositors are fully protected by the insurance. However, some people have more money in the bank than the insurance covers, so they are not fully protected.

Feb. 21, 2025 {{ Blogdetails.schedule_date|time }} 389

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