New Delhi: Reserve Bank of India has imposing several restrictions on New India Co-operative Bank and also superseded its board citing poor governance standards. The RBI has barred issuing new loans and suspension of deposit withdrawals for six months.
Speaking exclusively to News9, Adhil Shetty, CEO, BankBazaar.com, said the RBI has directed the New India Co-operative Bank to halt all financial operations, including granting loans, renewing advances, making investments, and disbursing payments, without prior approval for the next six months. Consequently, customers are currently unable to withdraw funds from their accounts.
Expressing his views on the query as to what can the depositors do to get back their money entrusted with the co-op bank, Shetty said, “The RBI and the government has always prioritised protecting customer interests in such eventualities. Banks are covered by insurance, and deposit accounts are protected up to a certain limit by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
“As per the amended DICGC Act, customers should be able to access their deposits with the bank within 90 days of a moratorium being declared by the RBI. All cooperative banks come under DICGC. A similar set of provisions on deposit insurance that cover scheduled commercial banks are also extended to co-operative banks. So, in case the bank goes into moratorium, the same protections will kick in. So you will be able to access up to Rs 5 lakh invested with the bank. This covers both, principal, and interest, so long as it is within Rs 5 lakh.”
Steps for Depositors During the Moratorium
The BankBazaar.com CEO assured the customers of the co-operative bank that the RBI will issue instructions from time to time on when the process will kick in and how you can access your funds. “You may be allowed withdrawals for urgent expenses like medical treatments, education, and weddings. In this case, the bank is permitted to set off loans against deposits. So, if you have a loan with the bank, it may be adjusted against your deposits, potentially reducing your liabilities,” he added.
It is essential to remember that practically no bank in India has collapsed since 1960. Even in case of stressed co-operative banks as well as private banks, there is still light at the end of the tunnel in the form of mergers. The RBI has constantly reiterated that it will not let any bank to collapse, and customers’ interest has always been a priority. So the chances of banks collapsing is very low. Even in the worst case, your deposits of up to Rs 5 lakh would be covered, Shetty said while assuring the public in general.
When asked to comment on a scenario – If an individual has Rs 20 lakh of deposits in a bank and the lender faces a crisis and cannot pay back, is there any agency that can come to your rescue so that you can get your money back?
To this, Shetty replied, “The only agency that can help you get your deposits back is the bank itself, working with the RBI and DICGC. Anyone else claiming to help you get your money out is trying to scam you. There are very clear rules about how much money you can get and under what conditions, and these cannot be bypassed.”
Adhil Shetty, CEO, BankBazaar.com expressed his views on Reserve Bank of India (RBI) imposing restrictions on New India Co-operative Bank, including a moratorium on withdrawals and a ban on new loans, due to poor governance. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
