India's central bank said on Monday it would allow depositors of troubled New India Co-operative Bank to withdraw up to 25,000 rupees (about $290) from their accounts.

RBI allows NICB depositors to withdraw up to Rs 25,000, reconstitutes advisory committee for bank's administrator.

Withdrawals can be made through branches or ATMs, but the total amount a depositor can withdraw will be capped at Rs 25,000 or the balance available in their account, whichever is lower.

India's central bank will need to inject at least another 1 trillion rupees ($11.54 billion) into the banking system by March-end as durable liquidity remains in a deficit despite a recent cash infusion,

The Reserve Bank of India (RBI) on February 24 has increased the small value loans ceiling per borrower of Urban Co-operative Banks (UCB) to Rs 3 crore per borrower and aggregate exposure of a UCB to housing, real estate and commercial real estate loans to 25 percent, according to the central bank notification.

On February 13, the Reserve Bank had imposed All Inclusive Directions (AID) on the Mumbai-based cooperative bank, which included a ban on deposit withdrawals, amid supervisory concerns.

In a move which can alleviate the concerns of many account holders, the Reserve Bank of India (RBI) has allowed depositors of New India Co-operative Bank Limited, Mumbai, to withdraw up to Rs 25,000 from their accounts.