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Depositors worried after RBI restricts ops of two banks
The RBI has restricted these banks from granting or renewing any loans and advances; making any investments; incurring any liability, including borrowing of funds and acceptance of fresh deposits
A day after the Reserve Bank of India (RBI) issued directions to the Pune Sahakari Bank Ltd. at Shivajinagar and Defence Accounts Cooperative Bank at Sadashiv Peth restricting their operations, hundreds of depositors on Tuesday gathered at various branches of these institutions, expressing shock and concern.
Sandeep Renuse, a depositor with Defence Accounts Cooperative Bank, said, “The depositors will be entitled to receive the deposit insurance claim amount of their deposits up to a monetary ceiling of ₹500,000. The RBI intervention will ensure that the fiscal health of the bank is maintained and all the depositors get justice.”
Ajit Pansare, a depositor with Pune Sahakari Bank Ltd., said, “The RBI decision will definitely protect the depositors who are entitled to receive the deposit insurance claim amount of their deposits. The RBI must keep a close eye on the bank’s functioning and ensure that the depositors’ interests are protected at all costs.”
Whereas Pune Sahakari Bank chairman, Prashant Joshi, said, “All the deposits are secure with our bank but our share capital has declined. We have been given a deadline for increasing the share capital during which time we will increase our share capital.”
The RBI has restricted these banks from granting or renewing any loans and advances; making any investments; incurring any liability, including borrowing of funds and acceptance of fresh deposits; disbursing or agreeing to disburse any payment; entering into any compromise or arrangement; and selling, transferring or disposing of any properties or assets without the prior approval of the central bank in writing. The RBI directions were issued under section 35A read with section 56 of the Banking Regulation Act, 1949 (as applicable to cooperative societies).
The RBI direction to Pune Sahakari Bank Ltd. stated, “It is hereby notified for the information of the public that in the exercise of powers vested in it under sub-section (1) of section 35A of the Banking Regulation Act, 1949, read with section 56 of the Banking Regulation Act, 1949, the Reserve Bank of India (RBI) vide directive dated March 9, 2023, has issued certain directions to the Pune Sahakari Bank Ltd., Shivajinagar, Pune, whereby, as from the close of business on March 10, 2023, 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 including borrowal of funds and acceptance of fresh deposits; disburse or agree to disburse 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 direction dated March 9, 2023, a copy of which is displayed on the bank’s website/premises for perusal by interested members of the public.”
“In particular, a sum not exceeding Rs10,000 of the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn subject to the conditions stated in the above RBI directions,” the RBI directive to Pune Sahakari Bank Ltd. further stated.
Yogesh Dayal, chief general manager who issued the directive, said, “The eligible depositors will be entitled to receive the deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs500,000 in the same capacity and in the same right, from the Deposit Insurance and Credit Guarantee Corporation, under the provisions of section 18A of the DICGC Act (amendment) 2021, based on submission of willingness by the concerned depositors. The depositors may contact their bank officials for further information. Details may also be accessed on the DICGC website at www.dicgc.org.in.”
“The issue of the above directions by the RBI should not per se be construed as cancellation of banking license by the RBI. The bank will continue to undertake banking business with restrictions till its financial position improves. The Reserve Bank may consider modifications of these directions depending upon the circumstances. These directions shall remain in force for a period of six months from the close of business on March 10, 2023, and are subject to review,” Dayal said.
The RBI issued a similar directive to the Defence Accounts Cooperative Bank, which was sanctioned by the RBI four years ago and has three branches and 3,800 account holders.
