The Reserve Bank of India (RBI) restricted a Bengaluru-based private bank on Saturday, 11 January, from doing business with immediate effect for alleged irregularities in transactions, an official 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 RBI said in a directive, which was accessed by IANS.
The central bank's Chief General Manager Yogesh Dayal issued the directive under Sections 35A and 56 of the Banking Regulation Act, 1949, from Mumbai.
The RBI, however, allowed the bank's savings and current account customers and depositors to withdraw cash up to Rs 35,000 till further notice.
The private bank will also not disburse payment whether in discharge of its liabilities and obligations or otherwise, enter into compromise or arrangement, and sell, transfer or otherwise dispose its properties or assets except, as instructed on 2 January 2020.
"The bank will, however, continue to undertake business with restrictions till its financial position improves," said an official, citing the directive.
The regulator clarified that its directive should not be construed as cancellation of the bank's licence issued by it.
"The directive shall remain in force for six months from 10 January and is subject to review," added the official.
‘Govt Will Protect Interest of Depositors’: Tejasvi Surya
BJP MP Tejasvi Surya tried to calm down anxious depositors by telling them that the government would take care of their interests.
"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 and is personally monitoring the issue. She has assured Govt will protect interests of depositors. Grateful for her concern," Surya tweeted on Monday.
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
In an interview with ANI, he added that his family also has an account with the bank and has met several depositors of the bank.
“I have met with many depositors of this bank and to be honest my family also has an account here. I met Finance Minister yesterday and today a meeting is underway at RBI with depositors and bank authorities,” he said.
‘Money Is 100% Safe’, Says Bank Chairman
Sri Guru Raghavendra Sahakara Bank’s Chairman K Ramakrishna on Monday said depositors' money with the bank is "one hundred per cent safe".
"Your money is 100 percent safe with Sri Guru Raghavendra Sahakara Bank. It is my responsibility," Ramakrishna said at the Sri Guru Narasimha Kalyanamandira auditorium where thousands of depositors had assembled to seek clarifications on the fate of their deposits.
Ramakrishna added that operations are restricted due to 62 dud loans.“The Reserve Bank of India (RBI) had restricted the lender from executing business and locked up Rs 300 crore of deposit”, he added.
To assuage customers, the call to an assistant commissioner of police by Bengaluru South MP Tejaswi Surya – who was not present at the spot – was relayed on loudspeaker and the MP claimed that he had spoken to Finance Minister Nirmala Sitharaman to help the customers.
Ramakrishna said he would meet customers again on 19 January with all the details and numbers.
The bank invited the depositors to assemble at the auditorium at 6 pm on Monday to update them about the status, following a Reserve Bank of India directive restricting the bank from doing business with immediate effect.
Bank Customers Threaten Police Action
Dramatic scenes and pandemonium ruled the gathering earlier before the chairman’s arrival, when thousands of customers threatened to go to the police station and file a case against Ramakrishna.
The depositors made this threat after hearing that Ramakrishna could not appear before them as he had undergone a heart operation.
"We want the directors of the bank here," shouted a depositor from the stage, while addressing fellow depositors.
As Ramakrishna spoke to the gathering in Kannada, hundreds of depositors shouted back at him seeking clarifications.
A handful of policemen were trying to control the crowd and bring order to the assembly.
"“The bank is saying that I cannot withdraw more than Rs 35,000. In case our fixed deposit matures, we have to renew it as we cannot encash it, “ " - Nagaraj M, 49, an account holder with the bank.
Many senior citizens and retired employees arrived at the gathering to know about the fate of their savings.
"Sri Guru Raghavendra Sahakara Bank was a good bank with only 0.5 percent non-performing assets. Nowadays we cannot trust any bank. See what happened with the PMC Bank," lamented another customer.
(With inputs from IANS)
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