Deposits up to ₹5L safe, RBI assures New India customers

Deposits up to ₹5L safe, RBI assures New India customers 

TIMES NEWS NETWORK 15.02.2025

Mumbai : The Reserve Bank of India (RBI) has appointed Shreekant, former chief general manager of State Bank of India (SBI) as ‘Administrator’ to manage the affairs of the New India Cooperative bank during the moratorium while restrictions are in force on withdrawals by account holders. It has also appointed a Committee of Advisors, which includes Ravindra Sapra (former general manager, SBI) and Abhijeet Deshmukh (chartered accountant), to assist the administrator during the transition. RBI has assured small savings account holders that their investments are safe. It said, “eligible depositors would be entitled to receive deposit insurance claim amount of their deposits up to a monetary ceiling of Rs 5,00,000 per deposit from the Deposit Insurance and Credit Guarantee Corporation (DICGC), as applicable under the provisions of the DICGC Act, 1961.” Deposits coming under the Rs 5 lakh insurance cover over 90% of the bank’s 1.3 lakh depositors (see graphic). The likelihood of depositors getting their full money would depend on the extent of losses reported by the bank for March 2025. 

The bank has 28 branches in Maharashtra and Gujarat. New India Cooperative Bank was founded as Bombay Labour Co-operative Bank in 1968 by late parliamentarian George Fernandes. It was renamed as New India Cooperative Bank after the Emergency. 

The bank reduced its accumulated losses from Rs 30.7 crore in FY23 to Rs 22.8 crore as of Mar 31, 2024. However, its advances portfolio decreased by Rs 155 crore (11.7%) to Rs 1174.8 crore as of Mar 31, 2024. Deposits increased by Rs 30.5 crore (1.3%) to Rs 2,436 crore as of Mar 31, 2024. Advances portfolio stood at Rs 1175 crore, working capital was Rs 2,997 crore, and total reserve funds were Rs 292.9 crore.  Under RBI directions, the bank is restricted from allowing withdrawals from savings or current accounts but can set off loans against deposits under certain conditions. Essential expenditures such as salaries, rent, and electricity bills are permitted as per RBI's directions. It cannot also grant or renew loans and advances, make investments, incur liabilities (including borrowal of funds and acceptance of fresh deposits), disburse payments, enter into compromises, or dispose of properties or assets without RBI's prior approval.

 “The Bank has shifted its Virar Branch to nearby location after obtaining necessary permission from RBI. The Bank has merged its Shanti Park, Mira Road Branch with Poonam Gar den, Mira Road Branch and Wakad, Pune Branch with Bibwewadi Branch to curtail rent & other administrative cost to improve profitability of the Bank,” said vice chairman, Gauri Bhanu in her letter to members last year. 

Senior citizens throng branches, say retirement funds lie locked 

Mumbai : Worried depositors thronged New India Cooperative Bank’s branches on Friday to inquire if their deposits were safe. New India branches had put up banners with a message from the “Acting CEO” saying amounts up to Rs 5 lakh were insured with Depositor Insurance and Credit Guarantee Corporation and would be released “in around 90 days.” But frustration was writ large on the faces of those gathered. There were questions regarding the fate of those with more than Rs 5 lakh parked. Cops were present at some outlets to keep the situation under control. Somashekhar Nair, a retired resident of Virar, said, "I have had an account with this bank for the last 20 years. I also receive some funds from LIC and other sources here. Now there is no one who can answer our queries. What is the govt doing? There is no one to speak to us from the bank. I need money for my medicines and other expenses, why should I beg from others when I have my own funds.” Ashok Bhosale, who retired from the BMC's Fire Brigade department, said he was deeply worried  because he had fixed deposits of 15 lakh in the Mulund branch. Outside the Vasai west branch, senior citizen Chandrashekar Pethe said the restrictions imposed on the bank will hurt the common man. “This is a social issue concerning all.” Another senior Shashikant Karambekar said he was confident of getting his money back as it was insured.

 In Thane, a school teacher who had a savings account, said she had some money in the New India account. Though her salary account was shifted to another bank, she had chosen to keep the account active. 

METAANALYSIS: The number of Urban Cooperative Banks declined to 1,472 in March 2024 from 1,502 a year ago. They had deposits of Rs 5,56,962 crore, of which Rs 3.71 lakh crore were covered under insurance. The rest were held by individuals above the limit. Cooperative banks account for 2.5% of total deposits in the country