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.
I want to assure all depositors of Sri Guru Raghavendra Co-operative Bank to not panic.
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
— Tejasvi Surya (@Tejasvi_Surya) January 13, 2020
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.
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.
Thanks for the timely intervention to protect the interest of thousands of Depositors. Request to increase the withdrawal amount to 100000 per month.Senior Citizens are entirely dependent on monthly Interest. Let them show some concessions to Senior Citizens
— Madhava Rao Nagendra (@nagamaninag) January 13, 2020
When the bank has been awarded as best performance and management, low npa continues from years, how can this happen? When rbi has audited the bank from these years…? pic.twitter.com/tCm61Az0d0
— Venkey (@Venkey18074447) January 13, 2020
Thank you sir @Tejasvi_Surya for your intervention. Please ask bank to give priority to senior citizens and also people who are in need for their children marriage and medical care. I was standing in queue today in kanakapura road branch and witnessed their pain first hand.
— Naresh jamadagni (@nnjamadagni) January 14, 2020
Croud outside the venue pic.twitter.com/revhaVlUbo
— Pavan Bhargav (@PavanBhargav16) January 13, 2020
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.