Money & Banking

Customers panic as RBI imposes restrictions on Raghavendra Co-op Bank

Our Bureau Bengaluru | Updated on January 14, 2020 Published on January 14, 2020

Customers of Bengaluru-based Sri Guru Raghavendra Co-operative Bank are in panic mode after the Reserve Bank of India (RBI) barred the lender from carrying out operations.

The RBI has barred the bank from carrying out operations such as granting new loans, making investments or accepting new deposits. However, customers can withdraw up to ₹35,000 of the total balance in any account.

A few officials with the bank clarified that the RBI’s restrictions do not mean cancellation of the banking licence, but restrictions are expected to continue “till its financial position improves”.

The bank’s board of directors met on Monday but did not get a clarification from the RBI. According to the bank’s Chairman Ramakrishna, the bank’s directors will meet again on January 19 with more details of NPA numbers.

For the last two days, hundreds of customers have been waiting outside the bank in Basavanagudi’s Netkalappa Circle to collect coupons to withdraw money from the ATM.

Huge defaults

According to a bank official, “there was a default of ₹350 crore on loans over the past three months, theryby attracting the restrictions. But these loans are secure with assets taken as securities. Even if they default, we can recover the loans by taking over the security”.

The bank started operations in 1999 and is headquartered in Basavangudi in Bengaluru.

It claims to have won awards for total business, highest profit and deposit mobilisation. The bank has posted financial statements only till 2017-18, which showed it had made a profit of more than ₹28 crore.

Published on January 14, 2020
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