Money & Banking

Guru Raghavendra Sahakara Bank depositors face an uncertain future

Anil Urs Bengaluru | Updated on October 02, 2020 Published on October 02, 2020

Guru Raghavendra Sahakara Bank in January was banned from carrying out operations after allegations of embezzlement came to the surface.

A former employee of an auto parts company, KV Madhusudan, 70, faces a strange dilemma. So do over 40,000-odd depositors of Guru Raghavendra Sahakara Bank which in January was banned from carrying out its operations after allegations of embezzlement came to the surface.

Following the ban, the bank a few months later allowed the depositors to withdraw up to ₹35,000 and later increased the limit up to ₹1 lakh. However, the bank is only allowing depositors to either withdraw money from their savings bank (SB) account or pre-close their fixed deposit (FD) account to withdraw up to ₹1 lakh. After withdrawal, the balance amount (over and above ₹1 lakh) will lie in their respective SB accounts, and can only be withdrawn when RBI raises the limit.

The depositors of the bank, consisting mostly of senior citizens, now wait impatiently for clarity on their life savings which are in the form of FD certificates.

“This limit of ₹1 lakh set by RBI has put senior citizens like me in a quandary. After unlocking the FD, the amount will be in SB account earning no interest then why should we close the FD,” asks Madhusudan.

Another depositor, Pruthvi Simha, too said even his family has invested in the bank. “Earlier I was getting interest deposited to my nationalised bank account. But now the Bank cannot transfer interest outside of Guru Raghavendra Sahakara Bank.”

Since the RBI ban, there have been other developments which have only deepened the crisis at the bank. K Raghavendra, the president of the bank and his wife have gone missing while the former CEO M Vasudeva Maiya was found dead.

Recently, Directorate of Enforcement (ED) attached properties worth ₹45.32 crore of certain key executives of the bank on allegations that they had diverted the bank’s funds to buy these properties by transferring loan amounts to fictitious accounts which were then used to buy assets.

Later, the ED initiated investigations under the prevention of money laundering act against several executives on allegations of embezzling over ₹1,500 crore collected from depositors promising them interest rates ranging from 12 to 16 per cent per annum.

The court is now hearing a PIL where petitioners have submitted to the court that Rs 235 crore is currently available with the bank and have appealed for further relaxation in withdrawal limit. Meanwhile, the depositors have nearly lost all hopes of recovering their money from the bank as the days pass by.

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Published on October 02, 2020
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