New India bank customers mull long road ahead, file complaint

In a meeting on Sunday, account holders were anxious and outraged, saying while some had already filed claims for recovery on the bank’s website, none knew when they would get their own money

Mumbai: Three days after the Reserve Bank of India (RBI) imposed a six-month transaction ban on New India Cooperative Bank, over 100 account holders of the troubled bank gathered at the Keshav Gore hall in Goregaon West on Sunday to discuss ways of recovering their savings.

Banking experts Vishwas Utgi (left) and Bhushan Thakur addressed depositors in Goregaon on Sunday. (Satish Bate/ HT photo)

Participants spoke about problems with the bank’s assurance regarding repaying deposits under ₹5 lakh within 90 days, the lack of information about what would happen to deposits over ₹5 lakh, and the long struggle ahead. They then marched to the Goregaon police station to lodge a written complaint against the bank.

Poor hit hard

Mumbai-based New India Cooperative Bank was started in 1968 with the support of the late socialist leader and former defence minister George Fernandes. The bank has 28 branches across Maharashtra and Gujarat, which cater to over 130,000 depositors. Around 90% of these depositors have less than ₹5 lakh in savings, indicating poor and lower middle class customers comprise bulk of the bank’s clientele.

On Thursday, the RBI imposed a six-month transaction ban on the bank owing to alleged misappropriation of ₹122 crore, carried out at its Goregaon and Prabhadevi branches. Account holders gathered in front of branches in large numbers the next morning, desperate to recover their money. As HT reported, all their requests for withdrawals were turned down, while banners at branch gates assured them that deposits under ₹5 lakh would be repaid within 90 days.

Customers on edge

In the meeting on Sunday, participants were anxious and outraged, saying while some had already filed claims for recovery on the bank’s website, none knew when they would get their own money.

“I was already under intense hardship as my husband suffered a paralytic attack,” said Neelima Kanore, a Mira Road resident and homemaker. With the RBI ban, she has lost access to over ₹5 lakh across her fixed deposits and savings account, which was crucial for meeting medical expenses and raising her two children, she said. “I don’t know how when I will get the money and how I will manage till then.”

Advocate and chartered accountant Ramesh Ladva, another participant in the meeting, said his family has a total of six savings accounts and six fixed deposits in the Goregaon branch, which have around ₹30 lakh.

“I had been saving up for the last eight years to buy a home, and had kept all the money in New India Cooperative Bank as the rate of interest was higher than other banks,” said Ladva. Though he rued the decision, it would not bring back the money, he said.

Rakesh Joshi, another participant and senior citizen, said he had ₹35 lakh in the bank’s Kandivali branch.

“Out of my lifelong savings, the biggest amount was in New India Cooperative Bank as the branch was located right opposite my home,” he told Hindustan Times. He opened a savings account for his one-year-old grandson in the branch just three months ago, he said. “The account was for his education.”

Long struggle

Like Joshi, Kanore and Ladva, other participants at Sunday’s meeting were clueless about the future course. They were further perplexed when Vishwas Utagi, former general secretary, All India Bank Employees Association, said he doubted if deposits under ₹5 lakh, covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC), would be paid back within 90 days as section 18A of the DICGC Act mandates that the insured can be paid only after a bank’s liquidation.

“The path ahead is long and one will have to take legal recourse to get relief,” he told the gathering.

As a small step in the long struggle, participants drafted a formal complaint which was submitted at Goregaon police station.

“Our hard-earned life savings are deposited with New India Cooperative Bank, which has been operational for several years,” they said in the complaint. Numerous families would face hardships due to their money being stuck with the bank, they noted, adding, “Neither the bank nor the Reserve Bank of India have provided any clarification about our deposits. We want action to be initiated against the bank for the fraud committed.”