A day after imposing several restrictions on city-based New India Co-operative Bank, the RBI on Friday superseded its board citing poor governance standards.
A large number of bank customers had gathered at its branches on Friday following RBI's restrictions, which included a bar on issuing new loans and suspension of deposit withdrawals for six months. The bank has 28 branches, mostly located in the Mumbai region.
In a statement, the Reserve Bank of India (RBI) said it has appointed Shreekant, a former chief general manager of the State Bank of India (SBI) as ‘Administrator’ to manage the affairs of the bank.
The Board of Directors of New India Co-operative Bank, Mumbai, has been superseded for 12 months, the RBI said in a statement.
It has also appointed a ‘Committee of Advisors’ to assist the Administrator in discharging his duties. The members of the Committee of Advisors are Ravindra Sapra (former General Manager, SBI) and Abhijeet Deshmukh (chartered accountant).
"The action is necessitated due to certain material concerns emanating from poor governance standards observed in the bank," it said.
On Thursday, the RBI had imposed several restrictions on the lender including on withdrawal of funds by depositors, amid supervisory concerns.
The restrictions came into force from the close of business on Thursday and would remain in force for a period of six months and are subject to review.
"Considering the bank's present liquidity position, the bank has been directed not to allow withdrawal of any amount from savings bank or current accounts or any other account of a depositor...," the RBI said while imposing the restrictions.
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The lender, however, has been allowed to set off loans against deposits subject to the conditions stated in the RBI directions. It may incur expenditure in respect of certain essential items such as salaries of employees, rent, and electricity bills.
The RBI further said that from the close of business on February 13, 2025, the bank shall not, without prior approval, grant or renew any loans and advances, make any investment, and incur any liability, including acceptance of fresh deposits.
It further said the directions were necessitated due to supervisory concerns emanating from the recent material developments in the bank, and to protect the interest of depositors of the bank.
Further, eligible depositors would be entitled to receive deposit insurance claim amounts of their deposits up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
RBI imposes Rs 68 lakh penalty on 2 banks
Mumbai, Feb 14 (PTI) The Reserve Bank on Friday said it has imposed penalties totalling Rs 68.1 lakh on two banks -- Nainital Bank and Ujjivan Small Finance Bank -- for contravention of regulatory norms.
A penalty of Rs 61.40 lakh was imposed on Nainital Bank Ltd for non-compliance with certain directions on ‘Interest Rate on Advances’ and ‘Customer Service in Banks’, RBI said in a statement.
Further, RBI imposed a penalty of Rs 6.70 lakh on Ujjivan Small Finance Bank for non-compliance with certain directions issued by RBI on ‘Loans and Advances - Statutory and Other Restrictions’.
RBI also levied a penalty of Rs 5.80 lakh on Shriram Finance, a non-banking entity, for non-compliance with certain provisions, including Know Your Customer (KYC ) guidelines and directions on ‘Data Format for Furnishing of Credit Information to Credit Information Companies’.
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