After PMC, another bank goes under RBI restriction; this time in Bengaluru

After PMC, another bank goes under RBI restriction; this time in Bengaluru

Agency News

Close on the heels of PMC bank crisis in Maharashtra, another cooperative bank in Bengaluru has caught up in a crisis and Reserve Bank of India (RBI) has slapped restrictions to save the bank from crisis.

The Sri Guru Raghavendra Sahakara Bank, a cooperative bank in Bengaluru has met with financial crisis after mounting non-performing assets (NPA). The bank's chairman K Ramakrishna has assured the customers that their money is 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.

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35,000 of the total balance in every savings bank or current account or any other deposit account may be allowed to be withdrawn subject to conditions..."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.

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 directors of the bank and the RBI are scheduled to undertake a meeting on Tuesday.