Bangalore South MP Tejasvi Surya | Twitter | @Tejasvi_Surya
Bangalore South MP Tejasvi Surya | Twitter | @Tejasvi_Surya
Text Size:

New Delhi: The Reserve Bank of India (RBI) has imposed restrictions on the functioning of Bengaluru-based Sri Guru Raghavendra Sahakara Bank (SGRSB), capping the withdrawal limit for its customers to Rs 35,000 for six months, after the bank failed to recover loans to the tune of Rs 350 crore.

Vasudev Maiyya, the chief adviser of SGRSB, told reporters Tuesday evening that the bank authorities will try to resolve the “issue by March”. He also said they were taking into consideration special requests by customers who are in urgent need of money.

“The issue has arisen because of 62 defaulters and we are in touch with the RBI to resolve the crisis,” Maiyya added.

Another bank official, who did not wish to be named, confirmed to ThePrint that the RBI restrictions were a result of a default on Rs 350-crore loans.

The RBI’s decision came weeks after it imposed regulatory restrictions on the Punjab & Maharashtra Cooperative (PMC) Bank for six months over financial irregularities.

The regulatory body, in its directive dated 12 January, said: “Sri Guru Raghavendra Sahakara Bank in Bengaluru shall not, without prior approval of the RBI in writing, grant or renew loans and advances, make investment, borrow funds or accept fresh deposits from 10 January 2020.”

“The bank will continue to undertake banking business with restrictions till its financial position improves,” the RBI statement read, adding that the directions will remain in force for a period of six months.

BJP MP Tejasvi Surya, in whose constituency the bank is located, sought to calm panicked depositors and said he had apprised Finance Minister Nirmala Sitharaman of the situation, and that she is “personally monitoring” it.

Speaking to reporters Tuesday, Surya said he too was a “victim” of the situation since his family also holds an account in the bank.

“I have met with many depositors of this bank and to be honest my family also has an account here. I met FM yesterday (Monday) and a meeting is underway at RBI today with depositors and bank authorities,” he told the local media in Bengaluru.


Also read: Yes Bank should be merged into SBI if India wants to avoid a banking tragedy


Depositors seeking ‘help’ take to social media 

Several depositors of SGRSB, many of them retired employees, have deposited their life’s savings in the bank.

Some of them took to social media to make the state and Union governments aware of their distress. A few also thanked Surya for intervening in the matter.

While the licence of crisis-hit SGRSB has not been cancelled, bank officials have assured customers that their deposits are “safe”.

Located in South Bengaluru’s Basavanagudi area, this bank has been operational since 1997 and has nine branches spread across the city.


Also read: We’ve cut rates but you can’t miss goals – finance ministry tells tax officials


 

ThePrint is now on Telegram. For the best reports & opinion on politics, governance and more, subscribe to ThePrint on Telegram.

2 Comments Share Your Views

2 COMMENTS

  1. I think the entire cooperative banking sector is sitting on a time bomb. It should find no place in the formal banking system. The network of cooperative banks in rural Maharashtra one knows for a fact is much more about politics than economics. One should not sound condescending. Were it not for the sense of security government ownership provides, half the PSBs would be under water. A sound banking system should be in place to support the economy as it grows to five and then trillion dollars.

LEAVE A REPLY

Please enter your comment!
Please enter your name here