Banking

Depositors Panic as RBI Imposes Withdrawal Limit on Bengaluru Co-Op Bank

Most of the depositors of the bank were senior citizens and claimed that they had put their money in the bank as it provided an additional 1% interest.

New Delhi: Days after the RBI imposed a withdrawal limit of Rs 35,000 from the Sri Gururaghavendra Sahakara Bank Niyamita, anxious customers lined up before the urban co-op bank in Basavanagudi, Bengaluru and demanded answers from the bank’s management.

Speaking to the Times of India, 62-year-old Usha Devi said that she desperately needed a job as her savings had been locked in the bank. “I worked as a private firm secretary. Four years ago, I deposited Rs 8 lakh in the bank and depended on the interest of around Rs 8,000. My husband has a back injury and been advised not to ride. We don’t have children or anyone to help us,” she said.

Speaking to the media, bank president K. Ramakrishna said that RBI officials would sort out the problem soon and every customer would get his/her money back and the cap will be removed.

A few days ago, an RBI notice held that the urban cooperative bank was being barred from all operations – granting new loans, making investments or accepting new deposits. The notice also said that only withdrawals up to Rs 35,000 from any account would be allowed.

According to a report in The Hindu, the notice said that restrictions would continue “till its financial position improves”. “These directions shall remain in force for a period of six months from the close of business of January 10 and are subject to review,” the notification from the RBI said.

Most of the depositors of the bank were senior citizens and claimed that they had put their money in the bank as it provided an additional one per cent interest.

A meeting called by the bank on Monday was abruptly postponed to January 19. “We are since morning but haven’t heard from the management yet. They were supposed to address us on Monday, but they postponed the meeting. I just hope we are able to get our money back,” one of the depositors told News18.

Also read: After Depositors, the PMC Scandal’s Second Potential Victim is Trust in India’s Financial System

Bank officials have maintained that depositors’ money was 100% safe and are expected to hold a meeting with depositors on January 19.

Several depositors also likened their plight to that of the PMC bank crisis.

Bank president Ramakrishna said the bank had stability and that there was no reason for depositors to panic. Stating that RBI attributed the restrictions to the rise in non-performing assets, he said, “NPA during last March was 0.50%, but as they have taken the numbers of the last eight years, there is some confusion. The restrictions are not permanent. It is temporary in the interest of the depositors and the bank… The bank’s licence has not been cancelled,” he said.

Bangalore South MP Tejasvi Surya tried to assuage depositors’ fears in a series of tweets and said that he was in touch with finance minister Nirmala Sitharaman.

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