The license of the crisis-hit Sri Gururaghavendra Sahakara Bank Niyamitha (SGRSBN) bank in Bengaluru has not been cancelled and it can continue to undertake banking business with restrictions till its financial position improves, RBI said.
The license of the crisis-hit Sri Gururaghavendra Sahakara Bank Niyamitha (SGRSBN) bank in Bengaluru has not been cancelled and it can continue to undertake banking business with restrictions till its financial position improves, Reserve Bank of India (RBI) said. It comes days after the RBI capped the withdrawal limit for the account holders at Rs 35,000. On January 10, 2019, the RBI had imposed certain restrictions on SGRSBN. “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 ₹35,000 of the total balance in every savings bank or current account or any other deposit account may be allowed to be withdrawn subject to conditions” the RBI said.
The central bank in September had imposed restrictions on the Punjab & Maharashtra Co-operative (PMC) Bank for six months on account of financial irregularities. The withdrawal limit was capped to Rs 1,000 which was later increased to Rs 50,000. Similar to SGRSBN, long queues of depositors were reported outside the PMC Bank. The central bank had also asked the bank not to give or renew any loans.
Meanwhile, SGRSBN is an urban cooperative bank and the central bank issued directions in the exercise of powers vested in it under sub section (1) of Section 35 A of the Banking Regulation Act, 1949, read with Section 56 of the Banking Regulation Act, 1949 (AACS). The rate of interest on deposits of ‘1 year to less than 2 years’ was 8 per cent per annum and 8.5 per cent per annum on deposits of ‘2 years up to 5 years’, according to the website of the bank.