Assurances Notwithstanding, Bengaluru Depositors Queue Outside Branch Hoping Their Savings are Safe

Depositors wait outside a branch of the bank on Tuesday. (News18)

Depositors wait outside a branch of the bank on Tuesday. (News18)

The panic among the depositors was triggered after the RBI capped a withdrawal limit of Rs 35,000 on the bank for the next six months and also restricted it from doing further business.

Stacy Pereira
  • CNN-News18
  • Last Updated: January 14, 2020, 7:30 PM IST
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Bengaluru: Hundreds of depositors of the Sri Guru Raghavendra Co-operative bank queued up outside its Basavangudi Branch in Bengaluru hoping to get some clarity on whether they would get back their savings invested with the bank.

The panic among the depositors was triggered after the Reserve Bank of India capped a withdrawal limit of Rs 35,000 on the bank for the next six months and also restricted it from doing further business. Most of the depositors were senior citizens and trusted the bank as it had maintained a good repute. They worried as to how long it might take for the situation to get resolved.

Expressing disappointment about the bank's response to their concerns, many said they put their money in the bank as it provided an additional one per cent interest.

"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,” said one of the depositors.

Some depositors even compared the situation with another PMC bank-like crisis. Bank officials maintained that depositors' money was 'hundred per cent' safe and are expected to hold a meeting with them on January 19.

Bank Chairman K Ramakrishna said the bank has stability and there was no reason for depositors to worry or panic.

Stating that RBI restrictions cited the rise in non-performing assets (NPAs), he said, "NPA during last March was 0.50 per cent, 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.

Requesting depositors not to fear, he further said the management was committed to set things right and the bank has a good record of over 20 years on their side. He said the bank has not given any benami loans and has Rs 2,200 crore security.

Bangalore South MP Tejasvi Surya, in a series of tweets on Monday night tried to allay the fears of depositors and told them that he was in touch with Finance Minister Nirmala Sitharaman, who was personally looking into the matter.

"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," he wrote on the social media site last night.

The MP's office in a statement has said Sitharaman has even spoken to the RBI Governor and officials on the matter and assured Surya that the government would do everything to protect the interests of the depositors and in the long-term interest of the bank.

“My family is also a depositor in this bank. It has a good repute. Have been assured at this point that the best interests of the depositors will be taken into account. There is no reason to panic. This is nothing like PMC Bank and interests of all stakeholder will be upheld. Would urge media to not draw parallels between the two banks,” Surya said while speaking to media on Tuesday.

Following an intervention from the finance minister, the RBI team in the city called for a meeting with various stakeholders, including the Karnataka State Co-operative Urban Banks Federation (KSCUBF).

“We met with the officials concerned, also put forth a presentation requesting to relax the Rs 35,000 limit and increase it to Rs 1 lakh. They (RBI officials) have assured us that they will review the situation and take a call on the matter shortly,” said KSCUBF Director Ramesh Babu.

The RBI has said the bank’s non-performing assets (NPAs) have risen above the 30% standard limit, forcing it to act. According to guidelines, a co-operative bank is not permitted to cross that limit. The management, however, said the bank has enough funds and sought more time from the RBI to make recovery of its bad loans.

"We have enough funds, depositors need not worry. The RBI has given us six months, but we can assure you we will clear it all by March 2020. Only 62 accounts of Rs 283 crore are pending. They are the NPA and we are in the process of recovery. Depositors should not panic,” said former CEO and the bank’s chief adviser MV Maiyya.

However, even as the former CEO tried to calm nerves, depositors continued to wait outside the branch hoping to get a chance to have a one-on-one interaction with the management. The bank has made payments worth Rs 36.8 crore to 1,317 account holders since Monday. Its management has also claimed to have Rs 2,200 crore to the tune of security.

The RBI had directed that from the close of business on January 10 "a sum not exceeding Rs 35,000 of the total balance in every savings bank or current account or any other deposit account by whatever name called, may be allowed to be withdrawn by a depositor."

According to sources, RBI's restriction was because the bank had seen a default of Rs 350 crore on loans over the past three months.

(With inputs from PTI)

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