Mala, a 27-year-old architect in Bengaluru, opened a savings bank account at the Sri Guru Raghavendra Sahakara Bank three months ago. On January 11, a second Saturday, she saw some rush at the Basavanagudi branch, although all banks were closed.
“Later that day, I received a message from the bank, saying that the Reserve Bank of India has imposed certain regulations on the bank and that the withdrawal limit has been capped at Rs 35,000. I did not panic, although the bank had a meeting with depositors on Sunday. On Monday, however, I saw some news reports on the RBI regulations on the bank. I panicked and rushed to withdraw my money and close the account,” Mala told TNM.
Since Monday morning, Mala and scores of other bank account holders — many of them senior citizens — have been standing in a long queue outside the Basavanagudi branch of the Bengaluru-based co-operative bank, in a mad rush to withdraw Rs 35,000 from their accounts, as an online transfer was not allowed. This is the only amount they would be able to withdraw in the next six months, as directed by the RBI.
In addition to capping the depositor withdrawal, on January 10 (Friday), the RBI also directed the co-operative bank to not grant or renew any loans or advances. These restrictions will remain in force for the next six months. Reports say that the current predicament was the result of default of Rs 350 crore on loans taken over the last three months.
When the depositors received the message on Saturday, many panicked in the absence of clarity or a statement from the bank. It was only a few months ago, in September 2019, that the central bank had imposed regulatory restrictions on the Punjab and Maharashtra Co-operative (PMC) Bank for six months over alleged financial irregularities.
On Sunday, in an attempt to allay fears and address the concerns, the bank called for a meeting in the evening. Many depositors gathered at the venue around 6 pm but the main officials of the co-operative bank did not turn up until after 9 pm. By then, many depositors had already left the venue in frustration. Hence, for many depositors, their concerns grew further when they saw news reports on Monday.
On the ground, however, it was a mixed response. Many expressed confidence that the bank will recover from the crisis in less than six months and return their deposits soon, while others continued to voice their concerns.
Ramakrishnan, who is in his 70s, has been a depositor for the last four years. “I have been regularly receiving interest. With the RBI regulation, it will be difficult to manage my family as we are solely dependent on this amount. I request the RBI to at least let us withdraw Rs 10,000 or Rs 15,000 per month in this six-month period instead of only Rs 35,000 in one shot,” he said.
A depositor, who did not wish to be named, pointed out that it was the lack of transparency from the bank management that has increased the fears among the public. “Currently, many depositors are on an exodus mode. So, even if the bank recovers, many may not keep their money in the bank,” he said. “The bank authorities must broadcast a message and instil faith in its depositors,” he added.
Rama Mohan, who has been a depositor and shareholder at the bank since 2008, fears the misinformation about the RBI regulation on the bank will ultimately harm the depositors. “If the bank garners a bad reputation as a result of rumours, the bank may not run in the future, and the depositors will stand to lose,” he added.
Amidst such apprehensions, many were confident that the management will not cheat its people.
“People need not panic,” Hari (name changed on request), another depositor, kept insisting to other depositors. He was among those who stayed back at the meeting on Sunday when the bank Chairman K Ramakrishna finally reached the venue to speak to the depositors.
“MP Tejasvi Surya was also live from New Delhi. He spoke to the depositors at the venue, assured us that they need not panic. His parents have also deposited their money in the bank. Besides, since Finance Minister Nirmala Sitharaman has now come into the picture, as assured by the MP, everything should be fine,” he said.