Sat Feb 15 08:02:33 UTC 2025: ## RBI Takes Over Mumbai Co-operative Bank, Freezes Operations

**Mumbai, India –** The Reserve Bank of India (RBI) has superseded the board of directors of the New India Co-operative Bank Limited in Mumbai, effectively dissolving the bank’s management for a period of 12 months. This action, taken under sections 36AAA and 56 of the Banking Regulation Act, 1949, follows concerns over significant administrative irregularities within the bank.

The RBI has appointed Shri Kant, a former Chief General Manager of the State Bank of India (SBI), as administrator to manage the bank’s operations during this period. A three-member advisory committee, including Ravindra Sapra (former GM, SBI) and Abhijit Deshmukh (Chartered Accountant), will assist the administrator.

Simultaneously, the RBI has imposed restrictions on the bank, prohibiting all transactions including withdrawals, deposits, and loan disbursements. This decision, announced Thursday evening, aims to protect the interests of the bank’s over 300,000 depositors, many of whom are located in Mumbai and Thane.

Depositors expressed anxiety over the situation, highlighting concerns about accessing their funds. While the RBI’s guidelines currently allow for a maximum withdrawal of ₹500,000 per depositor, the process and timeline for accessing even this amount remain unclear. Several depositors plan a meeting to discuss their concerns.

This action follows a trend of increasing regulatory scrutiny of co-operative banks in India. Over 450 co-operative banks have been closed in the last 20 years, with 17 closures in 2023 alone. The RBI cited deteriorating financial conditions as the reason for revoking the licenses of several other co-operative banks in recent months, including the Banaras Mercantile Co-operative Bank in July 2024 and others in Mumbai and Uttar Pradesh earlier this year.

Experts attribute the precarious situation of many co-operative banks to a combination of factors, including poor governance, high non-performing assets (NPAs), and the challenges of operating within a complex regulatory environment. The RBI’s increased regulatory actions, reflected in a significant increase in directives and penalties issued to urban co-operative banks (UCBs) in recent years, highlights the seriousness of the issue. Despite their crucial role in rural lending and financial inclusion, many co-operative banks are struggling to adapt to evolving regulatory standards and manage their financial risks. The increased NPA rate of co-operative banks, from 5.7% in 2013-14 to 8.8% in 2022-23, is a significant cause for concern. Since 2020, deposit insurance has been capped at ₹500,000 per depositor.

Read More