Saeed Ahmad Siddiqui, Secretary, Sarla CHS Ltd, Versova is distraught. He wonders how he will pay the society’s water and electricity bills and the staff salaries. Equally worried is a Mumbai-based transport operator who is concerned that he may not be able to pay his employees. They are among the many depositors hit hard by RBI’s directives against the fraud hit New India Co-operative Bank (NICB).
Under the directions, which were imposed on February 13, RBI has disallowed the Bank from granting or renewing any loans and advances, making any investment, or incurring any liability, among others. Businesses, cooperative housing societies and education trusts are bearing the brunt of these directives.
As soon as the news broke about the transgressions at the bank, there was a big rush by depositors to withdraw their monies by the bank. However, the Central Bank’s assurance that those with deposits up to ₹5 lakh would get their money back in 90 days through the deposit insurance arm stemmed the rush.
“The announcement of payment of ₹5 lakh in 90 days has, it seems, satisfied many depositors. According to stats almost 90 per cent of depositors have less than ₹5 lakh. So, a large number of them are quiet,” said a senior co-operative banker.
But for those with more than ₹5 lakh deposit in NICB, it could be a long haul to get their monies back, going by the experience of the depositors of the erstwhile Punjab & Maharashtra Co-operative Bank.
“As on date, our Society has over ₹1.5 crore parked in NICB, Versova branch. This money was kept for maintenance and other purposes. We need funds for regular upkeep and for paying staff salaries. The RBI has put six months restriction on the withdrawal of funds. How do we pay for water, electricity, staff salaries and other miscellaneous expenses?” says Siddiqui.
Meanwhile, the Mumbai-based transport operator says that he is facing problems because he had given Bank Guarantees from NICB to two public sector oil companies for his business of transporting CNG. The oil companies are now asking him to furnish fresh guarantees as the ones issued by NICB are no longer valid. He is worried that these companies will stop payments in the absence of bank guarantees impacting his business.