Bengaluru: Bengaluru city-based co-operative bank Sri Gururaghavendra Sahakara Bank Ltd has come under the Reserve Bank of India’s (RBI) scanner and has been kept under moratorium (legal definition: a legal authorization to debtors to postpone payment).
According to reports, while the bank is under a moratorium, the RBI has allowed for withdrawals of a maximum of Rs 35,000 from savings accounts.
The RBI’s directive as of January 10, as displayed on its website, reads, “Directions under Section 35 A of the Banking Regulation Act, 1949 (AACS) –Sri Gururaghavendra Sahakara Bank Niyamitha, Bengaluru, Karnataka. It is hereby notified for information of the public that in exercise of powers vested in it under sub section (1) of Section 35 A of the Banking Regulation Act, 1949 read with Section 56 of the Banking Regulation Act, 1949 (AACS), the Reserve Bank of India has issued certain Directions to Sri Gururaghavendra Sahakara Bank Niyamitha, Bengaluru, Karnataka whereby, as from the close of business on January 10, 2020, the aforesaid bank shall not, without prior approval of RBI in writing grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI Directions dated January 2, 2020, a copy of which is displayed on the bank’s premises for perusal by interested members of the public. In particular, a sum not exceeding ?35,000/- (Rupees thirty five thousand only) of the total balance in every savings bank or current account or any other deposit account may be allowed to be withdrawn subject to conditions stated in the above RBI Directions.
“The issue of the above Directions by the RBI should not per se be construed as cancellation of banking license by RBI. The bank will continue to undertake banking business with restrictions till its financial position improves. The Reserve Bank may consider modifications of these Directions depending upon circumstances.
“These Directions shall remain in force for a period of six months from the close of business of January 10, 2020 and are subject to review.[sic]”
The notice was signed by Chief General Manager Yogesh Dayal.
Earlier, soon after receiving the intimation from the RBI, the directors and president of the bank held a meeting to discuss the issue. The bank had also put a copy of the RBI’s directives on the walls of the building.
Meanwhile, worried account holders had formed a line outside the bank. Over 50 customers of the bank’s Basavanagudi branch were gathered outside, chanting slogans in Kannada such as “Beke beku, nyaya beku” (we want justice).
They blamed the bank’s strained financial condition on the bank loans.
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