The Reserve Bank of India (RBI) on Friday told the High Court of Karnataka that allowing depositors of Amanath Cooperative Bank (ACB) to withdraw up to 50 per cent of the money in their accounts would cause further erosion of funds.
Besides, the RBI said that relaxing the restriction imposed on withdrawal of cash would impact the ‘viability’ of ACB’s proposed merger with Canara Bank.
The RBI’s counsel made these submissions during a hearing on petitions in favour and against the merger, questioning restrictions imposed on withdrawals and seeking a CBI probe into the affairs of ACB.
‘Check details’ACB’s counsel contended that there is sufficient liquidity and fixed deposits that can bring down the anticipated fund erosion from 18 per cent to zero.
Justice Ram Mohan Reddy, who heard the submissions, has asked Canara Bank to go through the details of loans and value of the mortgaged assets with ACB to verify whether it is feasible to allow depositors to withdraw more money from their accounts during Ramadan. The next hearing is on July 21.
The RBI, early last year, had restrained depositors/account holders from withdrawing more than Rs. 1,000 per day.
On July 14, ACB sought relaxation of this restriction and allow depositors to withdraw larger sums for Ramadan.
