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Bad News for Depositors! RBI Restricts Operations of This Bank, Caps Withdrawals at 35,000

Atm Withdrawals

The Reserve Bank of India (RBI) issued a notice restricting the operations of Sri Gururaghavendra Sahakara Bank Niyamitha (SGRSBN) bank and has put curbs on cash withdrawals for the account holders of the bank. The maximum cash withdrawal limit for SGRSBN Bank now stands at Rs 35,000.

In its notice issued under the provisions of section 35A of the Banking Regulation Act, 1949, the RBI has said, “As from the close of business on January 10, 2020 (Friday), the bank shall not, without prior approval of the RBI in writing, grant or renew any loans and advances, make any investment, incur any liability.”

RBI in its notice said a sum not exceeding Rs 35,000 of the total balance in every savings bank or current account or any other deposit account will only be allowed to be withdrawn.

RBI has also restricted the bank from borrowing funds, accept fresh deposits, disbursing any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI directions dated January 2, 2020.

The apex bank, however, also said, “The issue of the above directions should not per se be constructed as cancellation of banking license by the RBI. The bank will continue to undertake banking business with restrictions till its financial position improves.”

Meanwhile, the co-operative bank, which has 10 branches, sent out a message to its customers and shareholders asking them to not to panic over RBI directions.

“We wish to request the depositors and shareholders that they need not panic. We assure the depositors that their money is safe and we will call depositors and shareholder meet shortly,” the message read.

As per RBI, the directions shall remain in force for a period of six months from the close of business of January 10, 2020 and are subject to review. The RBI had earlier issued written directions to the bank on January 2, 2020.

Sri Gururaghavendra Sahakara Bank Niyamitha is an urban cooperative bank. The SGRSBN bank has been operational since 1997. Earlier, RBI had restricted Punjab and Maharashtra Cooperative (PMC) Bank Limited, Mumbai, Maharashtra from carrying any kind of banking operations for 6 months.

SOURCE: bit.ly/36PP5A8

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