After PMC, RBI Cracks Whip On Bengaluru Bank, Restricts Withdrawal To Rs 35,000
Customers of Sri Guru Raghavendra Sahakara Bank in Basavanagudi, Bengaluru, panicked after the Reserve Bank of India (RBI) put a limit on the withdrawal of ₹35,000 while also restricting it from doing business.
Sri Guru Raghavendra Sahakara Bank Chairman K. Ramakrishna, on Monday, said 62 loans had restrained ₹300 crores of deposit. However, he assured the depositors that their money was "100 per cent safe" with the bank.
"Your money is 100 per cent safe with Sri Guru Raghavendra Sahakara Bank. It's my responsibility," Ramakrishna said at Sri Guru Narasimha Kalyanamandira auditorium.
The Reserve Bank of India (RBI) had restricted the lender from executing business due to 62 bad loans, Ramakrishna said after hundreds of depositors sought clarification.
"As from the close of business on January 10, 2020, the aforesaid bank shall not... grant or renew any loans and advances, make any investment... In particular, a sum not exceeding ₹35,000 of the total balance in every savings bank or current account or any other deposit account may be allowed to be withdrawn subject to conditions," the RBI said in a statement uploaded on its website.
To build faith among customers, the conversation between an assistant commissioner of police with Bengaluru South MP Tejaswi Surya was played on loudspeaker live and the MP claimed that he had spoken to Finance Minister Nirmala Sitharaman to help the customers.
The Bengaluru South MP also attached a letter in his tweet where he had appraised the finance minister of the situation.
I want to assure all depositors of Sri Guru Raghavendra Co-operative Bank to not panic.— Tejasvi Surya (@Tejasvi_Surya) January 13, 2020
Hon'ble Finance Minister Smt. @nsitharaman is appraised of matter & is personally monitoring the issue. She has assured Govt will protect interests of depositors. Grateful for her concern. pic.twitter.com/pmoAcUFAu7
Ramakrishna also promised to meet the customers on January 19 with all the details.
Before his arrival in the auditorium, thousands of bank customers threatened to file a case against Ramakrishna.
"The bank is saying I can't withdraw more than Rs 35,000. In case of our fixed deposit maturing, we will have to renew it as we can't encash it," Nagaraj M, a customer with the bank for the past six years.
The lender had invited depositors to the auditorium to update them on the bank's status, after an RBI directive was passed, restricting the bank from doing business with immediate effect.
Many retired people had come to fight for their life-long savings and demand answers from the bank.
"It was a good bank with only 0.5 per cent NPAs. Now we can't trust any bank. See what happened with the PMC Bank," another customer said.
Shankar Sharma, an employee of a private company, said that the majority of depositors were senior citizens and retirees. "I don't have an account with the bank, but my mother, uncle, aunt have deposited money in it. I came for them," Sharma said.
Earlier, the RBI had imposed regulatory restrictions in September on the PMC Bank for six months over alleged financial irregularities.
The apex bank had asked the bank not to grant or renew any loans and advances or make any investment, including borrowing of funds and acceptance of fresh deposits.
Subsequently, the RBI fixed the withdrawal limit for the PMC Bank depositors to ₹1,000 which was gradually increased to ₹50,000 in phases.