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.

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 Mumbai police have registered a case against the New India Cooperative Bank's General Manager for allegedly embezzling Rs 122 crore of funds.

This is the first major action against a co-operative bank in Maharashtra after the collapse of Punjab and Maharashtra Co-operative Bank due to large scale fraudulent loans.

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

India's central bank said on Friday it has taken control of the board of New India Co-operative Bank for 12 months, a day after its depositors were barred from withdrawing money from 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

The Reserve Bank of India (RBI) has imposed strict restrictions on New India Co-operative Bank Limited in Mumbai, citing supervisory concerns over its financial position. As per the restrictions which are effective from the close of business on 13 February 2025,

Account holders in thousands gathered outside Mumbai-headquartered New India Co-operative Bank Limited branches to withdraw their hard-earned savings, soon after the Reserve Bank of India put several restrictions on the lender.