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RBI imposes restrictions on Bengaluru bank; lender says depositors' money 100% safe

The Bengaluru-based lender cannot issue new loans or make any new investments without prior approval from the banking regulator for the next six months

twitter-logo BusinessToday.In   New Delhi     Last Updated: January 14, 2020  | 10:20 IST
RBI imposes restrictions on Bengaluru bank; lender says depositors' money 100% safe
Bengaluru bank: Another PMC Bank in the making?

The Sri Guru Raghavendra Sahakara Bank said that the depositors' money was 100 per cent safe after RBI imposed restrictions on the lender. The Bengaluru bank's chairman K Ramakrishna said, "Your money is 100 per cent safe with Sri Guru Raghavendra Sahakara Bank. It's my responsibility."

The Chairman said that Rs 300 crore was locked up due to 62 loans. Amid the panicking customers, the bank relayed a call placed by Bengaluru South MP Tejaswi Surya on the loudspeaker. The MP said that he has spoken to Finance Minister Nirmala Sitharaman to help the customers.

"I want to assure all depositors of Sri Guru Raghavendra Co-operative Bank to not panic. Hon'ble Finance Minister Smt. Nirmala Sitharaman is appraised of matter & is personally monitoring the issue. She has assured Govt will protect interests of depositors. Grateful for her concern," he tweeted following the panic among depositors.

Chairman Ramakrishna said he would meet the customers of the Bengaluru bank on January 19 again with details and numbers.

The RBI had imposed restrictions on the Bengaluru bank and curbed withdrawal at Rs 35,000. "...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 Rs 35,000 of the total balance in every savings bank or current account or any other deposit account may be allowed to be withdrawn subject to conditions..." the RBI said in a statement.

The Bengaluru-based lender cannot issue new loans or make any new investments without prior approval from the banking regulator for the next six months. The directors of the bank and the RBI are scheduled to undertake a meeting on Tuesday.

The Sri Guru Raghavendra Sahakara Bank case comes on the heels of the PMC Bank case. RBI had capped withdrawal from the PMC Bank at Rs 1,000 initially, which was eventually increased to Rs 50,000. The restrictions were imposed due to financial irregularities, following which a huge scam involving the top officials of the bank was unearthed.

Also read: Sharad Pawar meets Anurag Thakur over revival of fraud-hit PMC Bank

Also read: PMC Bank scam: Only 10% of deposits withdrawn as RBI clampdown continues

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