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Bengaluru bank vows to return every penny, depositors panic
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SME Times News Bureau | 14 Jan, 2020
Sri Guru Raghavendra Sahakara Bank Chairman K. Ramakrishna has blamed
the Reserve Bank of India (RBI) for the imbroglio and said he could
return the depositors' money the next day the regulator withdrew the
business restrictive order.
"The RBI restricted the bank to allow
only Rs 35,000 withdrawal. We are following the RBI rules. If tomorrow
itself the RBI revokes restrictions, we are ready to return full
deposits to customers," Ramakrishna told depositors with folded hands.
Hundreds
of Sri Guru Raghavendra Sahakara Bank depositors on Tuesday showed up
to withdraw the Rs 35,000 allowed by the RBI. Anxious depositors formed a
serpentine queue in front of the bank.
The RBI has asked the cooperative bank to disburse only Rs 35,000 after adjusting any liability the customers owed to the bank.
"A
sum not exceeding Rs 35,000 of the total balance in every savings or
current account or any other deposit account by whatever name called may
be allowed to be withdrawn by a depositor," said the bank sharing the
RBI order though text message to customers.
The RBI also ordered
that whatever liability a depositor was having to the bank in any
manner, either as a borrower or surety, that amount might be adjusted
first to the relevant borrower accounts.
The RBI instructions,
issued by Chief General Manager Yogesh Dayal under sections 35 A and 56
of the Banking Regulation Act, 1949, said the cooperative bank should
not, without prior approval of the RBI in writing, grant or renew loans
and advances, make investment, borrow funds or accept fresh deposits
from January 10, 2020.
On Monday, amid dramatic scenes and
pandemonium at the Sri Guru Narasimha Kalyanamandira auditorium in
Basavanagudi, near Ramakrishna Muth on Bull Road, the bank's chairman
claimed that the bank was not facing any cash crunch.
"We gave
only 54 per cent deposits as loans, balance 42 per cent deposits are in
cash, which the bank can return as soon as the RBI revokes
restrictions," said Ramakrishna addressing hundreds of worried
customers.
Bengaluru South Lok Sabha member Tejasvi Surya also
assured depositors about the safety of their money. "I want to assure
all depositors of Sri Guru Raghavendra Co-operative Bank not to panic.
Finance Minister Nirmala Sitharaman is apprised of the matter," tweeted
Surya.
He said Sitharaman is personally monitoring the crisis.
"She has assured the government will protect interests of depositors.
Grateful for her concern," said Surya.
The bank also publicised a
letter from Surya, in which he said a group of depositors and bank
authorities met him at 11.30 p.m. on Saturday.
"Surya spoke to
Sitharaman on Sunday and apprised her of the situation. The Finance
Minister, after speaking with the RBI Governor and other authorities
assured Surya that the government will do everything in its capacity to
protect the depositors' interests and the bank's long-term interests,"
said the letter from Surya's office.
According to the missive,
Surya spoke to Sitharaman thrice on Monday who promised to safeguard the
depositors, including senior citizens.
After addressing the
worried customers on Monday evening, the police saved Ramakrishna by
locking him in a room as anxious depositors outside demanded return of
money.
Though he had to be protected, at one time during his explanation, many depositors clapped for a point he made in Kannada.
The
bank's website featured several pictures felicitating Ramakrishna,
including a testimonial by former Chief Justice of India M.N.
Venkatachaliah.
At the end of FY19, the bank had a paid-up
capital of Rs 70 crore, total deposits of Rs 2,291 crore, loan and
advances of Rs 1,687 crore, investments of Rs 593 crore and 0.5 per cent
non-performing assets.
Other financial details include total
business value of Rs 3,979 crore, working capital of Rs 2,507 crore,
gross income of Rs 261 crore, total expenditure of Rs 200 crore, gross
profit of Rs 60 crore, provisions and reserves of Rs 5 crore, net profit
of Rs 36 crore and a net worth of Rs 155 crore among others.
The
bank also showcased photographs of a few awards it won and talked about
new launches such as mobile and internet banking, RTGS and NEFT
transaction, availability of personalised branded chip-based debit card,
text message alerts and multiple other schemes.
The bank's head
office is in Basavanagudi, and branches at Kanakapura Road, Poorna
Prajna Layout, Kengeri, Raja Rajeshwari Nagar, Vidyaranyapura, BTM
Layout and Rajainagar in Bengaluru.
Ramakrishna has convened another meeting with depositors at the National College ground on January 19.
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