RBI Puts Restriction on Cash Withdrawals Up to Rs.35,000 for SGRSBN

RBI Puts Restriction on Cash Withdrawals Up to Rs.35,000 for SGRSBN

Highlights:

  • RBI restricts cash withdrawals from SGRSBN ( Sri Gururaghavendra Sahakara Bank Niyamitha)Bank.
  • The maximum cash withdrawal limit stands at Rs 35,000 for the next 6 months.
  • As per RBI’s notice, (SGRSBN) bank will be unable to grant or renew loans and advances, make any investment or incur any liability, including borrowing of funds and acceptance of fresh deposits from the close of business on January 10,2020. 

The Reserve Bank of India (RBI) has imposed severe curbs on cash withdrawals from Sri Guru Raghvendra Sahakara Bank Niyamitha in Bangalore. The account holders can only withdraw up to Rs.35,000 from their account for the next 6 months. In RBI’s notice, (SGRSBN) bank will be unable to grant or renew loans and advances, make any investment or incur any liability, including borrowing of funds and acceptance of fresh deposits from the close of business on January 10,2020. 

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.”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35,000 of the total balance in every savings bank or current account or any other deposit account may be allowed to be withdrawn subject to conditions.”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 (SGRSBN) bank has also been stopped from disbursing any payment whether in the 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. The bank, however, will continue to undertake banking business with certain restrictions imposed by RBI untill its final position improves.   

This news has created panic among more than 9,000 depositors of (SGRSBN) bank, seeking answers to withdraw their life savings. Sri Guru Raghavendra Sahakara Bank is an Urban Cooperative bank that has been operational since 1997. The bank has 10 branches in the Karnataka capital and has blamed 62 loans that have locked up Rs 300 crore of deposit. 
The RBI had earlier issued written directions to (SGRSBN) bank on January 2, 2020.  According to the Central Bank, the directions shall remain in force for a period of six months from the close of business and are subject to review.

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