Extra 1% interest drew many to Bengaluru's co-op bank

Hundreds of depositors showed up at the branches of Sri Guru Raghavendra Sahakara Bank on Monday, two days after the RBI capped the cash withdrawal at Rs 35,000.

The low cash withdrawal limit upset many depositors, especially senior citizens. Some others were, however, hopeful that the bank would get back on track soon.

Nearly 600 people, especially retirees and women, have deposited their money with the bank mainly because it offered an additional one per cent of interest. The bank's reputation for financial discipline was another draw. Many deposited several lakhs of rupees.

A retired college principal from NR Colony was among those who queued up to withdraw cash. He said: "I have deposits worth Rs 30 lakh. Even if I withdraw Rs 35,000 a day, how many days should I keep coming to the bank? We are all worried a lot."

While the bank authorities tried to allay the depositors' fears, depositors suspected something fishy. Sridhar K M, a retired government employee, gave voice to many depositors. "We don't know what happened in the bank. Until March last year, the bank gave loans worth Rs 1,400 crore. But its latest balance sheet puts the loan recovery at a mere 0.50%. In the last nine months, the bank had non-performing assets (NPAs) worth more than Rs 600 crore. I think both the bank and the RBI are hiding facts. The RBI may have let the bank's wounds fester for long."

According to Sridhar, he depends entirely on the interest accruing on his deposit. "I can withdraw only Rs 35,000 now. After three months, I will have no money for daily expenses," he said.

A third account-holder, who deposited his entire retirement fund with the bank, said he was drawn by the extra one per cent of interest. "We deposited our money as the bank had a good reputation in the area. We have a family function next week but cannot withdraw our own money," he said.

Talking among themselves, senior citizens said they had seen similar situations in other cooperative banks and hoped the bank would start functioning normally in the near future.