RBI places curbs on Bengaluru-based Sri Guru Raghavendra Sahakara Bank; 'need not panic,' clarifies lender

After the Punjab & Maharashtra Co-operative (PMC) Bank fiasco, the Reserve Bank of India (RBI) has now placed restrictions on the withdrawal limit of another bank - this time, the Bengaluru-based Sri Guru Raghavendra Sahakara Bank. According to an RBI statement, the curbs were placed on January 10 for a period of six months. Particularly, customers of the bank are now allowed to withdraw only up to Rs 35,000. The bank has also been prevented from issuing any new loans or advances or from making any new investments exceeding this amount.

The statement released by the RBI on its website stated, "As from the close of business on January 10, 2020, the aforesaid bank shall not... grant or renew any loans and advances, make any investment... In particular, a sum not exceeding ₹35,000 of the total balance in every savings bank or current account or any other deposit account may be allowed to be withdrawn subject to conditions..."

However, the Bengaluru-based bank's license will not be revoked, RBI clarified in a press release. "The bank will continue to undertake banking business with restrictions till its financial position improves," the RBI release stated.

The RBI has said that the licence of the bank has not been cancelled, it can continue to "undertake banking business with restrictions till its financial position improves". https://t.co/3CrxdHbqeW

— ANI (@ANI) January 14, 2020

After the RBI directive, Sri Guru Raghavendra Sahakara Bank issued a statement to its customers, depositors, and shareholders reassuring them that their money is 'safe' and they 'need not panic'.

"We wish to request depositors and shareholders that they need not panic. We assure the depositors that their money is safe and we will call for a depositors and shareholder meet shortly,” the message by the Sri Guru Raghavendra Sahakara Bank stated, according to a Times of India report.

It is understandable that the customers of the bank might have reason to panic since in a similar incident last year, the RBI had placed restrictions on the PMC bank in September 2019, owing to financial regularities in the scam-hit bank. The RBI had placed curbs on PMC bank, forbidding customers to withdraw an amount exceeding Rs 1,000, initially. Later, the withdrawal limit was gradually increased to Rs 35,000.

Depositor: My husband has a fixed deposit here - around Rs 15-20 Lakh. He is retired. We're dependent on it. When we got the message we were disturbed. But when we came here, the advisor in the bank told us that deposit is safe. But we need to wait for 6 months. We're not happy. pic.twitter.com/9s0Kmv4JpW

— ANI (@ANI) January 14, 2020

Following this incident, BJP MP from Bengaluru Tejasvi Surya posted a note of assurance on Twitter, asking the customers of Sri Guru Raghavendra Sahakara Bank to not panic since, he said, Finance Minister Nirmala Sitharaman is monitoring the situation herself.

I want to assure all depositors of Sri Guru Raghavendra Co-operative Bank to not panic.

Hon’ble Finance Minister Smt. @nsitharaman is appraised of matter & is personally monitoring the issue. She has assured Govt will protect interests of depositors. Grateful for her concern. pic.twitter.com/pmoAcUFAu7

— Tejasvi Surya (@Tejasvi_Surya) January 13, 2020

BJP MP Tejasvi Surya: I can assure all of you that the government is committed to protect the interest of the depositors. This issue is nothing like the PMC bank issue, so do not panic. #Bengaluru https://t.co/tHJ2ZFhpwn

— ANI (@ANI) January 14, 2020

The Bengaluru South MP has also gone on record to state, "I have met with many depositors of this bank and to be honest, my family also has an account here. I met the Finance Minister yesterday."