Are you a New India Co-operative Bank customer? Here's what you need to do to recover claim up to Rs 5 lakh

The New India Co-operative Bank is in the middle of a financial storm after the Reserve Bank of India (RBI) imposed strict restrictions, following an alleged Rs 122 crore fraud. Depositors have been left in limbo, unable to withdraw their money for six months, as RBI cracks down on the Mumbai-based bank's operations.  

The RBI has barred the bank from sanctioning new loans, renewing advances, or accepting fresh deposits. These restrictions kicked in after the close of business on February 13 and will remain in effect for six months. In the latest development, a Mumbai court has remanded Hitesh Mehta, the bank's general manager and head of accounts, in police custody till February 21 over allegations of siphoning off Rs 122 crore.  

New India Co-operative Bank scam: How can depositors claim their money? 

All banks are mandated to insure deposits under the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI. In case of financial distress, depositors can claim up to Rs 5 lakh from the DICGC after submitting their willingness and completing the verification process. This serves as a safeguard for their funds.  

Here's how you can recover up to Rs 5 lakh under the DICGC scheme:

- Depositors must submit their claims along with valid identity proof and a written declaration of willingness to receive the insurance amount.  
- The claim should include details of an alternate bank account where the amount will be credited.  
- If preferred, the funds can also be transferred to an Aadhaar-linked bank account.  
- The bank must submit the claims to DICGC by March 30, 2025, and payments will be processed by May 14, 2025.  

New India Co-operative Bank controversy

The controversy unfolded on Friday, February 14, as panic-stricken depositors rushed to Mumbai-based New India Co-operative Bank branches following the RBI’s decision to impose strict restrictions due to supervisory concerns. Citing "poor governance standards," the central bank also superseded the Board of Directors for a year.  

To oversee the bank’s operations, RBI appointed Shreekant, a former chief general manager of the State Bank of India, as the administrator, supported by a committee of advisors. The bank has been barred from issuing or renewing loans, making new investments, or accepting fresh deposits without prior written approval from the RBI. Additionally, it cannot disburse payments or incur liabilities without clearance.  

Depositors remain unable to access their savings, current, or other accounts. However, the bank is permitted to offset loans against deposits and cover essential expenses such as employee salaries, rent, and utility bills. The RBI emphasised that these measures are aimed at safeguarding customer interests