The recent financial crisis at New India Cooperative Bank has left not only individual account holders but also cooperative housing societies struggling to manage their finances. The Reserve Bank of India (RBI) has imposed strict withdrawal limits, further complicating the situation for affected housing societies.
Housing Societies Face Financial Struggles
For cooperative housing societies, managing funds efficiently is already a challenge, with maintenance collections often failing to match rising expenses. The restrictions imposed on New India Cooperative Bank have further exacerbated these difficulties, affecting societies that had deposited significant sums with the bank.
One such affected society is Jeevan Dhara Cooperative Housing Society in Kandivali. According to its chairman, Rakesh Joshi, their deposits of around ₹9 lakh are now blocked. While the society has accounts in another bank, the bulk of its funds were kept in New India Cooperative Bank, creating a dire financial situation.
Another society impacted is Bhavneet Cooperative Housing Society in Kandivali’s Charkop. The society had planned structural repairs before the monsoon, collecting funds from members and depositing ₹70 lakh in New India Cooperative Bank. However, with access to these funds restricted, society members are now reconsidering whether to proceed with the necessary repairs.
RBI’s Withdrawal Cap and Its Implications
On February 24, 2025, after assessing the bank’s liquidity, the RBI restricted all account holders, including housing societies, to withdraw only up to ₹25,000. This amount is insufficient for societies to cover essential maintenance, staff salaries, and other operational costs.
Regulatory Challenges for Housing Societies
As per the Model Bye-Laws of Cooperative Housing Societies (Number 113), societies are required to open accounts in a state, district, or scheduled bank with an ‘A’ audit class rating for three consecutive years. However, despite following such guidelines, societies like Jeevan Dhara and Bhavneet have found themselves in financial distress due to the bank’s crisis.
Depositors Organizing Legal Action
Amid the crisis, depositors of New India Cooperative Bank have decided to take legal action to recover their funds. Meetings have been organized at Mira Road and Goregaon West, where depositors discussed filing a writ petition in the Bombay High Court.
During these meetings, legal experts highlighted the case of Kapol Cooperative Bank, which is under liquidation, where depositors could claim only ₹5 lakh under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme. To avoid a similar fate, depositors are demanding full protection of their funds.
Key Demands of the Depositors
- Legal recourse – Filing a writ petition in the Bombay High Court to recover all funds.
- Sovereign guarantee – Similar to the Life Insurance Corporation of India (LIC), depositors demand that bank deposits should have sovereign protection.
- Appointment of top legal experts – Depositors are pooling funds to hire experienced lawyers to fight for their rights.
Conclusion
The collapse of New India Cooperative Bank has exposed vulnerabilities in cooperative banking, leaving depositors and housing societies struggling. With housing societies unable to access their funds, maintenance, repairs, and day-to-day expenses have become a major challenge. The decision to move to court for legal action could set a precedent for future banking crises and strengthen deposit protection mechanisms in India.
With many societies and individuals financially impacted, the upcoming Bombay High Court writ petition is expected to play a crucial role in determining the fate of the bank’s depositors.
