On September 1, residents of Koliwada in Borivli’s Eksar village were in for a shock when the Maratha Co-operative Bank suddenly stopped customers from withdrawing money more than Rs. 1,000. The explanation the bank had was the Reserve Bank of India (RBI) had frozen its banking operations for six months from close of operations on August 31, invoking the provisions of the Section 35A of the Banking Regulation Act, 1949. The Section allows the RBI to intervene to prevent affairs of any bank being conducted in a manner detrimental to interests of the depositors.
Few among the 99,695 poor customers could grasp the impact of the decision on their lives. The bank caters to families involved in fishing and farming and has branches at Colaba, Gorai and Andheri-Versova. “Most of us were originally paddy farmers. With increasing urbanisation, most of us have sold off our farm lands to builders, and now live off the earnings from interests generated from the money deposited in fixed deposits (FDs). With the bank suddenly clamping on our only source of income, we have been caught off-guard,” said Prakash Wadekar. His family has cumulative FDs of Rs. 8 lakh. “We normally do not keep too much of cash in the house since the bank is nearby and now we are celebrating Ganesh festival with just the cash left in our house,” he says.
His neighbour Sulbha Thakur is in a similar situation. The family lived off the interest earned from cumulative FDs of Rs. 15 lakh belonging to her mother and father-in-law. Her husband drives a rickshaw but that does not earn enough to take care of the household expenses. She is wondering how she will pay up her daughter’s LIC premium and the school fees of her two sons. The bank is now asking customers to fill in forms to seek withdrawal permission from the RBI. “The RBI has now allowed emergency withdrawals in three categories: health, education or marriage. People will be able to withdraw up to Rs. 1 lakh,” said local MLA Manisha Chaudhary. “Agitated account holders gathered on September 1 on the bank premises to know why they were not allowed to withdraw their money. I called the bank higher-ups to visit the branch, meet people, and forced the officials to announce to the people gathered.”
Anushree Malgaonkar, chairperson of the bank, refused to comment, but the bank provided its financial information to some of its customers. In a statement, the bank has said that it has maintained surplus liquidity throughout the year. It has shown net surplus liquidity position of Rs. 3,515.17 lakh including cash in hand of Rs. 267.68 lakh as on August 31. The bank currently has FDs worth Rs. 20158.24 lakh.
The bank has put up a banner outside its Borivli branch informing customers that they could withdraw between Rs. 50,000 and Rs. 1,00,000 if their pleas for withdrawal on the grounds of either medicinal, educational, or marriage contingency was accepted by the RBI. “Soon you may be able to withdraw your entire money from your accounts,” the statement says. The bank sent an SMS to its customers on September 3 stating that the bank’s financial position is satisfactory and that the “RBI has restricted our business activity temporarily”.
In a release, the RBI has said that the bank could continue its business with restrictions till its financial position improves. It has also said that the RBI may consider modifications of its directions depending upon circumstances.
The writer is freelance journalist
