Spooked by RBI ban, New India Co-op Bank customers throng branches

All requests for withdrawal of funds were turned down, with banners at branch gates saying deposits would be paid back in around 90 days

Mumbai: After the Reserve Bank of India (RBI) enforced a six-month transaction ban on the Mumbai-based New India Co-operative Bank Ltd on Thursday due to irregularities in its lending practices, scores of panic-stricken customers thronged the bank’s branches on Friday, desperate to recover their life’s savings.

People began queueing up at Vasant Vihar branch in Thane from 8am, said a police officer posted at the branch. (Praful Gangurde /HT Photo)

Many were able to access lockers containing their valuables but all requests for withdrawal of funds were turned down, with banners at branch gates saying deposits would be paid back in around 90 days. At several places, police was deployed to keep the swelling crowds under check.

RBI’s action

New India Co-operative Bank has 24 operative branches – 17 of these are in Mumbai, four in Thane, two in Palghar, and one in Navi Mumbai.

On Thursday, the RBI notified that the bank “shall not, without prior approval of RBI in writing, grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits and disburse or agree to disburse any payment”.

In another statement on Friday, the RBI said it had taken over the operations of bank superseding its board of directors and appointed Shreekant, former chief general manager of State Bank of India, as administrator for 12 months.

Panic at branches

When Hindustan Times visited the Vasant Vihar and Mulund branches of New India Co-operative Bank on Friday, anxious customers were seen standing in long queues.

Laxman Bhoir, a 47-year-old head-loader, was pacing around the Vasant Vihar branch in Thane, trying to get information on when he would be able to withdraw at least his mother’s money.

Several family members had accounts in the branch as it was conveniently located close to their home, he told HT.

“My mother does not know that I made a fixed deposit out of my father’s gratuity and her savings, amounting to ₹3-4 lakh. She is a heart patient, and I am really worried about what will happen when she finds out that her money is locked out,” he said.

Jaydeep Gaikwad, whose father is undergoing treatment at a hospital, was crestfallen when he reached the branch around noon to withdraw cash for payment of medical bills. “I have around ₹3 lakh in my account, but I’m being told I cannot withdraw it. I don’t know what to do,” he said.

People had been queueing up at the branch since 8am and many were resorting to arguments and violence due to frustration, said a police officer posted at the branch. “We were deployed at 9am after the police station was informed about the situation,” he said.

Sunil Tamandvar, 52, said though the bank had issued a token allowing access to his locker on Saturday, lakhs of rupees that he had saved over the years was now stuck.

“This is a huge blow. I have important financial commitments, but not being able to access my money,” he said.

A similar story played out at the Mulund branch, as customers were told they could not withdraw money, but were given tokens allowing access to their lockers.

“We have been standing in queue for several hours for tokens, so we can empty our lockers,” said Jayesh Thakkar. “We also have an FD, but we don’t know when we will get it.”

A poster at the gate of the branch added to the confusion and desperation.

“Your deposits up to ₹5 lakh are insured with Deposit Insurance and Credit Guarantee Corporation of India and will be paid in around 90 days,” it said, leaving customers in the grey about what would have to deposits above ₹5 lakh.

“We invested about ₹75 lakhs in deposits only a few days ago. We don’t know what will happen to the money now,” said a senior citizen.

Several customers said even net banking and UPI payments were not accessible.

Widespread disruptions

Advocate Shirish Deshpande, chairman, Mumbai Grahak Panchayat, said in a letter to the RBI governor on Friday that the transaction ban would cause massive disruptions and urged the central bank to hold a meeting with customers to identify an alternative solution.

“Many people and co-operative housing societies have approached us with concerns about payment of bills, taxes and other day-to-day expenses. EMIs of people who have loans from the bank will also bounce and they will be tagged as defaulters. This is drastic,” he said.

Customers deserved to know what the exact problem was with the bank and the RBI must take them into confidence and find an alternative option via discussion.

“Six months is too a long time for people to not have access to their money,” he said.

No response was received from the RBI till the time of going to print.