Big depositors of the fraud-hit New India Co-operative Bank (NICB) plan to take a leaf out of the strategy adopted by the erstwhile Punjab & Maharashtra Co-operative Bank depositors. They are considering forming an association to keep their deposits safe and get them back.
While about 90 per cent of NICB’s eligible depositors, who have up to ₹5 lakh deposit with the bank, will get their money back from RBI’s deposit insurance arm by mid-May 2025, those who have more than ₹5 lakh deposit face uncertainty regarding their deposits.
Deposit Insurance and Credit Guarantee Corporation’s deposit insurance cover is only available for deposit accounts with a balance of up to ₹5 lakh.
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The monies of NICB’s large depositors, including senior citizens, cooperative housing societies, and education trusts, could be saved only if the bank is reconstructed or amalgamated with another bank.
“We need to find an investor to save the bank. That is the only way to protect the savings of large depositors. The NICB Association will work on securing the interests of the remaining 10 per cent of depositors, whose deposits above ₹5 lakh are not covered by deposit insurance,” said Chander Purswani, Convenor of the Cooperation Alliance in BJP’s Maharashtra Pradesh Sahkar Aghadi Cell.
Fraud-hit NICB
The RBI issued certain directions to the Mumbai-based NICB on February 13 due to supervisory concerns arising from recent developments in the bank and to protect the interests of depositors.
Under the directions, NICB cannot, without the prior written approval of the RBI, grant or renew any loans and advances, make any investments, or incur any liability.
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Considering the bank’s present liquidity position, RBI has directed the bank not to allow any withdrawals from savings or current accounts, or any other account of a depositor. However, it may set off loans against deposits, subject to the conditions stated in the RBI’s directions above.
According to agency reports, the General Manager was arrested by Mumbai police on February 15 for misappropriating ₹122 crore of the bank’s funds. The case has been transferred to the Economic Offences Wing.
The RBI on February 14 superseded NICB’s Board of Directors for a year. Consequently, it appointed Shreekant, a former Chief General Manager of State Bank of India (SBI), as Administrator to manage the affairs of the bank during this period.
The central bank also appointed a Committee of Advisors to assist the Administrator in discharging their duties. The members of the Committee of Advisors include Ravindra Sapra, a former General Manager at SBI, and Abhijeet Deshmukh, a Chartered Accountant.