Many senior citizens invested their life savings in the bank, and are now debt-ridden or struggling due to the bank's withdrawal restriction.

Raghavendra Bank scam Senior citizens in Bengaluru ask politicians to take action
Money Controversy Thursday, June 10, 2021 - 12:34

More than 20,000 people who deposited their hard-earned money in the Bengaluru-based Sri Guru Raghavendra Sahakara Bank have been left in the lurch for over a year, after the Reserve Bank of India (RBI) restricted the bank from doing business. With no relief despite many promises, a group of victims under the aegis of Sri Guru Raghavendra Sahakara Bank Depositors Forum have started a social media campaign to urge politicians to take remedial action. The bank, which was accused of irregular transactions and non-compliance with RBI rules, among other issues, is under investigation by the RBI, the Enforcement Directorate, Anti Corruption Bureau, Criminal Investigation Department and the Bengaluru police, and former officials of the bank have been arrested as well. But among all this, the depositors, who are mostly senior citizens, are still struggling to make ends meet. 

After the restriction, the bank allowed withdrawals of upto Rs 35,000, which was later raised to Rs 1 lakh. “The situation is very bad for most of us. More than 18 months have passed and us senior citizens are mostly dependent on the interest of our savings put as fixed deposits in the bank. Many of us had put the lion's share, if not all our savings, in this bank as it was giving 10% interest which no other bank was giving. And we trusted the bank because of the RBI rating for the past many others,”  Prasanna Madrakal, a depositor, told TNM. He shared that surviving in a place like Bengaluru with Rs 1 lakh for 18 months, with negligible income from other sources, has been difficult to say the least. “Two months back I lost my 38-year-old daughter due to prolonged illness. Although I had money in the bank, I had to take loans pleading with my wife’s valuables, with a heavy interest burden. Fortunately, during the crisis, few of my friends helped me,” he added.

The situation has robbed many senior citizens like Prasanna of their dignity, as they have been forced to rely on family and friends, or worse, be debt-ridden in the last leg of their life. All the victims blame the RBI and Registrar of Cooperative Societies for their predicament, as they gave the bank a good rating over the years, prompting people to invest in it. 

Prasanna also explained how there is a lack of clarity on what aid will be given to the depositors, and by whom. He questioned where the politicians are, who had initially shown interest in helping the victims. “We don’t know where to pin our hopes now. There are some court cases too but we know how things take time in those systems,” he further added. The Times of India reported that 43 of these investors have died, as of the first week of June, with their money still tied up in the bank. 

Oddly, one of the victims of the scam includes a retired RBI official. Ranganath is the president of the Sri Guru Raghavendra Sahakara Bank Depositors Forum, and posted a video on their social media. In it, he said, “I am also an investor in this ill fated bank. We are struggling to live our daily lives. The death toll has now increased to 53. Many people do not have any money to buy medicines. We are people who live on the interest of the principal amount. Unfortunately, due to the negligence of RBI and RCS over the last 20 years, the fraud was going on and that was very huge.”

In another video, one of the investors, Dr TR Gururaja Rao, said, “I have invested all my savings in the bank as the RBI gave very good ratings to it. More so, people I knew also spoke well of the bank. It's been almost 18 months that nothing has happened, even though our political leaders have promised help. It is very difficult for senior citizens to live only on hope. Therefore I urge the concerned people to take the issue up on war footing so that senior citizens and co-depositors happily live their last few years.”

An overwhelming majority of these victims are senior citizens of the Brahmin community of south Bengaluru. They had deposited their lifetime worth of their savings here, as the bank was offering 1-2% higher interest than most commercial banks. 

In January 2020 owing to the bad debt situation of the bank, the RBI had invoked Section 35A of the Banking Regulation Act and put a cap on withdrawals. All other transactions were also put off by the RBI being the regulating authority. In January, the customers were told that they could only withdraw Rs 35,000, which was subsequently raised to Rs 1 lakh in June 2020.  June 2020

Some victims have also gone to the Karnataka High Court but there has been no immediate relief yet. In January 2020 Tejasvi Surya, the MP of Bangalore South, and others had met few of these depositors assuring cooperation from the union government.