Customers panic as RBI puts curbs on urban co-op. bank

They are being allowed to withdraw a maximum of ₹35,000

January 11, 2020 11:47 pm | Updated 11:48 pm IST - Bengaluru

Anxious customers gather outside Sri Guru Raghavendra Sahakara Bank in Bengaluru on Saturday.

Anxious customers gather outside Sri Guru Raghavendra Sahakara Bank in Bengaluru on Saturday.

Customers of Sri Gururaghavendra Sahakara Bank Niyamita panicked and gathered on the bank premises in Basavanagudi on Saturday morning after a public notice outside the bank announced that the Reserve Bank of India (RBI) had imposed restrictions on withdrawals.

The RBI notice, a copy of which is available with The Hindu , says that the urban cooperative bank has been effectively barred from any operation — granting new loans, making investments or accepting new deposits — except for allowing withdrawal of a maximum of ₹35,000 of the total balance in any account. While it clarifies that this does not mean cancellation of banking licence, it said restrictions will continue “till its financial position improves”.

This created panic among the bank’s customer base, many of whom gathered outside the premises and demanded answers from the management.

Rajalakshmi, 60, a resident of Basavanagudi, was angry and fearful. “My parents are suffering from chronic ailments and are bedridden, and have invested all their savings in the bank. Now my mother needs money immediately for her surgery. Who will be responsible if something happens to her?,” she told The Hindu .

Another customer, Aparna B., had her parents’ savings deposited in the bank and a significant chunk was supposed to be withdrawn this week. “My sister is getting married this month-end and we had planned to go shopping this Monday. We don’t know what we should do now,” she said.

The bank’s website claims it has won four awards among urban cooperative banks, including for total business, highest profit and deposit mobilisation. The bank has posted financial statements only till 2017-18, which shows it had a profit of over ₹28 crore.

‘Deposits are safe’

One of the bank officials, Muralidhar, addressed the customers and assured them that their deposits were safe. “There has been a default of ₹350 crore on loans over the past three months, attracting RBI restrictions. But these loans are secure with assets taken as securities. Even if they default, we can recover the loans by taking over the security,” he said.

On the restrictions, he said the bank would seek clarification from RBI on Monday. “ATMs will function normally from Monday,” he said.

Top News Today

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.