(Reuters) -India’s central bank on Thursday barred Mumbai-based New India Co-operative Bank from issuing new loans and suspended deposit withdrawals for six months, citing supervisory concerns and the lender’s liquidity position.
The Reserve Bank of India (RBI) said the directions were necessary due to concerns arising from “recent material developments” at the bank, and to protect the interest of depositors, although did not elaborate on the specifics of these concerns.
The RBI also ordered the co-operative bank not to make any investments or borrow funds.
An email sent to the bank’s nodal officer requesting comments did not immediately elicit a response.
New India Co-operative Bank has been grappling with losses in the last two fiscal years, with the bank posting a loss of 227.8 million rupees in the financial year ended March 2024, and a loss of 307.5 million rupees in fiscal 2023, according to its annual report.
The bank’s advances reduced to 11.75 billion rupees as of March 31, 2024, from 13.30 billion rupees a year earlier. Its deposits rose to 24.36 billion rupees from 24.06 billion rupees.
RBI said the directions do not mean the lender’s banking license is cancelled and that it will continue to monitor its position and take necessary actions as needed.
In 2019, the regulator had curbed business at Punjab and Maharashtra Co-operative Bank after finding financial irregularities such as under-reporting of bad loans. It later approved Centrum Financial Services to take over the lender.
(Reporting by Nandan Mandayam and Nishit Navin in Bengaluru; Editing by Mrigank Dhaniwala and Vijay Kishore)
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