India's central bank said on Friday it has taken control of the board of New India Co-operative Bank for 12 months, a day after its depositors were barred from withdrawing money from the lender.

The Reserve Bank of India (RBI) has imposed strict restrictions on Mumbai-based New India Co-operative Bank, barring it from issuing new loans, accepting fresh deposits, or allowing withdrawals for six months.

RBI’s action was necessitated due to certain material concerns emanating from poor governance standards observed in the Mumbai-headquartered New India Co-operative Bank.

Expressing concern over their deposits in the bank, several customers reached the bank branch and enquired about their deposits and withdrawals.

However, RBI stated that the bank is allowed to set off loans against deposits subject to the conditions stated in the directions

The RBI has superseded the Board of Directors of the Bank for 12 months. It has appointed Shreekant, former Chief General Manager (CGM) of SBI, as the Administrator to manage the bank’s affairs during the period.

Amid growing panic among account holders of New India Co-operative Bank, the Mumbai Police have registered a case against the bank’s former General Manager, Hitesh Praveenchand Mehta, for allegedly siphoning Rs 122 crore from its treasury.