RBI restrictions on New India Co-op Bank: ‘All our savings stuck in this bank’

Panic gripped customers of New India Cooperative Bank after the Reserve Bank of India RBI imposed severe restrictions on withdrawals for six months due to concerns over the bankrsquos financial stability While customers are allowed to access their lockers to retrieve valuables bank officials have provided no clarity on the situation Large crowds gathered outside bank branches across the city after the news spread on social media Customers told midday they no longer feel safe keeping money in banks as their lifetime savings are now locked inside the bankCustomers rush to the New India Coop Bank in Andheri after strict withdrawal curbs on FridayAt all branches the bank put up notices statingldquoDear Depositors the RBIrsquos restrictions are in the interest of depositors Deposits up to R5 lakh are insured with the Deposit Insurance and Credit Guarantee Corporation DICGC and are expected to be paid within 90 days We assure you that your money remains safe We appreciate your patience and cooperation mdash Order by Acting CEOrdquoCustomer distressAt the Borivli West branch Chirag Dedhia and his wife Forum Dedhia said ldquoWe opened a joint savings account here seven years ago This morning we heard something was wrong and rushed to our branch The bank isnrsquot allowing withdrawals We canrsquot trust any bank anymoremdashour entire savings are stuckrdquoShital Shah a Kandivli resident said ldquoI have over Rs 20 lakh in fixed deposits and R5 lakh in my savings account I saved this money for my childrenrsquos future Now itrsquos all stuckrdquo Keyur Goghri a Borivli resident added ldquoMy entire family has savings in this bank over R5 lakh Suddenly this morning we were told the bank is shutting down transactionsrdquoNotice put up outside the bank PicsNimesh DaveAt the Mulund West branch retired fire officer Ashok Bhosale was in distress ldquoI kept R15 lakh here for my daughterrsquos wedding The bank says R5 lakh will be released but when What about the rest This is a financial disasterrdquo Deepak Patel a dailywage driver said ldquoI saved for my sisterrsquos wedding in May My family depends on me and now my money is stuck I am helpless The RBI must intervenerdquoPolitical reactionNCPSP Sharad Pawar faction spokesperson Sardar Gurjyot Singh Keer Guru criticised the lack of action ldquoThe RBI issued the notice at 9 am and it circulated online yet the Mumbai police have done nothing We have petitioned the Supreme Court to form a Special Investigation Team SIT to probe this scam Even PMC Bank victims havenrsquot received their money back yetrdquoRBIrsquos stanceThe RBI clarified that the restrictions under Section 35A and 56 of the Banking Regulation Act were imposed due to supervisory concerns and to protect depositorsrsquo interestsThe directive prohibits the bank from issuing loans renewing deposits or disbursing funds without RBI approval However depositors can claim up to Rs 5 lakh through the Deposit Insurance and Credit Guarantee Corporation DICGC after due verificationThe RBI emphasised that the bankrsquos license has not been cancelled and operations will continue under strict monitoring The restrictions are in force for six months subject to reviewFinancial expert speaksFinancial expert Mitil Chokshi has raised concerns over the crisis at New India Cooperative Bank questioning the absence of warning signs leading up to the current situationldquoWhat worries me is that there were no staged red flags Why werenrsquot there any Regulators conduct inspections and while I am not blaming them the issue is that no warnings were gradually escalated over time Why has this crisis suddenly surfacedrdquoChokshi also pointed out broader challenges within the cooperative banking sector which was supposed to be restructured but continues to struggle with systemic issuesldquoThe cooperative sector was meant to be streamlined yet it remains unorganised The governmentrsquos goal was to rationalise the sector but instead it is competing with large and midsized banks This competition is problematic and a clear strategic direction for the cooperative sector is urgently neededrdquoHe also cited past financial crises such as NSEL and PMC Bank as cautionary examplesldquoUnless there is a significant revaluation of investmentsmdashlike in the Franklin Templeton case where revaluation prevented lossesmdashdepositors could face major setbacks These are the critical risks in such situationsrdquo he saidAs the situation unfolds Chokshi expects the RBI to step in by appointing an administrator ldquoThe RBI is likely reassessing its options In cooperative banking crises an administrator is typically appointed to evaluate assets and liabilities plan distribution and prioritise smaller depositors while utilising assets to reduce liabilitiesrdquo He further highlighted the ongoing stress in the microfinance sector which plays a crucial role in cooperative bankingldquoMany cooperative banks primarily issue microfinance loans and the industry is under pressure across India New India Cooperative Bank is no exception A comprehensive revamp of the cooperative banking sector is the need of the hourrdquo Chokshi addedRegarding depositorsrsquo concerns Chokshi emphasised key financial uncertaintiesgtgt It remains unclear whether withdrawals beyond Rs 5 lakh will be allowedgtgt The extent of DICGC insurance coverage needs to be clarifiedgtgt Payouts will likely be staggered with smaller depositors holding up to R5ndash10 lakh expected to recover their funds However those with deposits exceeding Rs 10 lakh face uncertaintyMumbai policersquos EOW has launched an investigation into alleged irregularities at New India Cooperative Bank A bank representative has filed a complaint with the EOW which is currently recording their statement The EOW is working to determine what went wrong and where the alleged discrepancies occurred Sources say further legal action will be taken after the statement is recordedVoicesChirag and his wife Forum Dedhia Borivli residentlsquoWe opened a joint savings account here seven years ago This morning we heard something was wrong and rushed to our branch The bank isnrsquot allowing withdrawals We canrsquot trust any bank anymoremdashour entire savings are stuckrsquoAshok Bhosale A retired fire brigade officerlsquoI kept Rs 15 lakh here for my daughterrsquos wedding The bank says R5 lakh will be released but when What about the rest This is a financial disasterrsquoDeepak Patel DriverlsquoI saved for my sisterrsquos wedding in May My family depends on me and now my money is stuck I am helpless The RBI must intervenersquoSardar Gurjyot Singh Keer Guru NCPSP spokespersonlsquoThe RBI issued the notice at 9 am and it circulated online yet the Mumbai police have done nothing We have petitioned the Supreme Court to form a Special Investigation Team SIT to probe this scamrsquoKeyur Goghri Borivli residentlsquoMy entire family has savings in this bank over R5 lakh Suddenly this morning we were told the bank is shutting down transactionsrsquo