In a major setback for customers, the Reserve Bank of India (RBI) has suspended the operations of New India Co-operative Bank due to a Rs 122-crore fraud. This decision has left over 1.3 lakh depositors worried about their savings, with account withdrawals being completely frozen from February 13, 2025. Customers are now scrambling to safeguard their financial commitments.
Key Actions for Affected Customers:
- Change EMI Bank Mandates: If your loan EMIs are being deducted from your New India Co-op Bank account, act quickly. Cancel the ECS debit instructions and switch to another bank account to avoid defaults, penalties, and a potential dip in your credit score.
- Redirect Mutual Fund SIPs: Investors must inform their mutual fund intermediaries or asset management companies (AMCs) about the bank suspension. Update your bank details to ensure SIP payments continue uninterrupted and redemption proceeds are credited to a functional account.
- Set Off Deposits Against Loans: Customers with both loans and deposits in New India Co-op Bank can request the bank to offset their deposits against their outstanding loan amounts. This can ease repayment burdens while account access remains restricted.
DICGC Insurance Coverage:
Deposits up to Rs 5 lakh per depositor are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme. However, it may take around 90 days before these funds are accessible.
Financial Safety Lessons:
The crisis at New India Co-op Bank, following similar incidents involving PMC Bank and YES Bank, underscores the importance of diversifying bank deposits. Spreading savings across multiple banks enhances security and maximizes insurance coverage.
- Each bank offers separate insurance coverage of Rs 5 lakh under DICGC.
- Joint accounts and different ownership types (like guardianship, partnership) can increase insurance protection.
Final Word:
Customers must act promptly to minimize disruptions to their finances. Review your loans, SIPs, and deposits today, and shift your banking mandates to a reliable institution. Staying proactive can help you navigate this financial crisis smoothly.
