Bengaluru co-op bank customers panic as RBI imposes restriction on withdrawals

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Written by Darshan Devaiah BP | Bengaluru | Updated: January 14, 2020 5:39:39 pm

Coperative-bengaluru-bank Customers gather in front of the Sri Guru Raghavendra Sahakara Bank in Nettakallappa circle, Basavanagudi, Bengaluru, on Tuesday. (Express Photo: Darshan Devaiah BP)

Panicked customers of Sri Guru Raghavendra Sahakara Bank Tuesday thronged the bank to withdraw their money, after the Reserve Bank of India (RBI) imposed restrictions on withdrawals.

The RBI had on January 10 stopped the bank from doing business with immediate effect, for alleged irregularities in transactions. According to the RBI, customers can withdraw only Rs 35,000 from their savings account, current account or any other deposit account.

On Monday, the Bank chairman, K Ramakrishna, told customers 62 loans had locked up Rs 300 crore of deposit. “The money is safe with the bank and people don’t need to worry,” he said.

Most customers of the Sri Guru Raghavendra Sahakara Bank are retired employees and senior citizens. Speaking to indianexpress.com, Mukund Rao, retired headmaster and bank customer, said “They (bank) made a big mess by giving unsecured loans to 62 people without proper documents. Now, the RBI instructions have made us face the consequences.”

Many had deposited their retirement benefits in the bank for a high rate of interest. “I am a retired person and whatever retirement benefits I received were deposited in this bank. I have been associated with the bank for the past five years, never faced any problem. But now, this has happened. There is no clarity from the bank or from the RBI,” Balakrishna, a customer, told indianexpress.com.

 PEOPLE-q-bank-bengaluru Hundreds of customers stood in a queue outside the bank in Basavanagudi to collect coupons to withdraw money from their accounts. (Express Photo: Darshan Devaiah BP)

Customers who face hospital bills or marriages in their family are especially worried. Nagarathna, a housewife from Basavanagaudi, said, “There are many allegations against the bank. Some are saying the bank management has given loans without proper documents to politicians. The government should probe this and return our money. Many people here have emergencies, but can’t get at their money.”

M Vasudev Maiya, chief advisor of the bank, said there was no need to worry.

In a media briefing, Maiya said: “I assure everyone that by March 31 this year, everything will be cleared and every single paisa returned. All 62 borrowers have given their acknowledgments, fresh documents, and security. I assure people there is no need to worry.”

Maiya also claimed there was “some conspiracy” against the bank. “In the past 20 years, we haven’t had any black mark on the bank. We are the number one cooperative bank in Karnataka and have won many banking awards. There is some conspiracy against the bank. We called a customer meeting on our own yesterday, we didn’t run away. So there is no need to worry, ” he added.

According to its website, the bank started in 1999 and has eight branches in Bengaluru, with its head office in Basavanagudi. It has put up its financial report only till 2017-18, which shows it had a profit of over Rs 28 crore in 2017-18.

BTM Layout-branch Police beefed up security in front of the bank’s BTM Layout branch in Bengaluru. (Express Photo: Darshan Devaiah BP)

“The bank shall not, without prior approval of the RBI in writing, grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise,” the RBI said in a directive to the bank.

The RBI said the co-operative bank should not enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets.

READ | ‘Don’t panic’, Tejasvi Surya tells depositors as RBI caps withdrawal limit of Bengaluru co-operative bank

The central bank said the curbs should not be construed as a cancellation of banking licence by RBI. Sri Guru Raghavendra Sahakara Bank will continue to undertake banking business with restrictions till its financial position improves, it said. These curbs will remain in force for a period of six months from January 10, 2020.

Bengaluru South BJP MP Tejasvi Surya has requested depositors of the bank to not panic, saying the Union finance minister was personally monitoring the issue. “I want to assure all depositors of Sri Guru Raghavendra Co-operative Bank to not panic. Hon’ble Finance Minister Smt. Nirmala Sitharaman is appraised of matter and is personally monitoring the issue. She has assured Govt will protect the interests of depositors. Grateful for her concern,” Surya tweeted.

In his tweet, Surya also attached the letter in which he had apprised the finance minister of the situation.

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