Panic gripped customers of New India Co-operative Bank after the Reserve Bank of India (RBI) imposed severe restrictions on withdrawals for six months due to concerns over the bank’s financial stability.

RBI’s action was necessitated due to certain material concerns emanating from poor governance standards observed in the Mumbai-headquartered New India Co-operative Bank.

The Reserve Bank of India (RBI) has imposed strict restrictions on Mumbai-based New India Co-operative Bank, barring it from issuing new loans, accepting fresh deposits, or allowing withdrawals for six months.

However, RBI stated that the bank is allowed to set off loans against deposits subject to the conditions stated in the directions

These directions came into effect on from the close of business on Thursday and are expected to remain in force for a period of six months, subject to review.

The RBI has replaced the board of New India Cooperative Bank, appointing Shreekant as Administrator for 12 months. Restrictions have been imposed on loan issuance and withdrawals due to governance issues and liquidity concerns.

Reserve Bank of India (RBI) imposes restrictions on New India Co-operative Bank, limiting operations and withdrawals.

Reserve Bank of India superseded the Board of Directors of New India Cooperative Bank Ltd, Mumbai, for a period of 12 months, the central bank said in a statement on Friday, a day after it imposed several restrictions on the lender.

All requests for withdrawal of funds were turned down, with banners at branch gates saying deposits would be paid back in around 90 days