Withdrawal amount raised at troubled cooperative bank: RBI to HC

The RBI on Tuesday informed the high court that it has increased the withdrawal limits at Sri Guru Raghavendra Cooperative Bank Ltd from Rs 35,000 to Rs 1 lakh with effect from June 19.

As a result, more than 54% of the bank’s customers could withdraw the entire balance in their account. The central bank made the submission before a division bench headed by Chief Justice Abhay S Oka and Justice Nataraj Rangaswamy, which had directed it to increase the withdrawal amount since most depositors are retired and are in need of the money during the Covid-19 pandemic and the lockdown.

RBI’s counsel submitted that the bank had received 7,623 applications to withdraw money citing hardship and medical needs. Of this, 2,467 applications have been processed and Rs 12.30 crore had been released to 2,423 applicants facing serious hardships, while Rs 79 lakh has also been given to 33 applicants for medical needs.

During the hearing, it was brought to the court’s notice that people have been standing in long queues before the banks to file applications to withdraw the deposits to tide over the pandemic. The bench directed the bank’s administrator to inform customers that they can get the money transferred through RTGS to some other account and they can also email their withdrawal applications by email to avoid standing in the queue.

"Both the administrator of the bank and the special officer of the Sri Guru Sarwabhouma Credit Souharda Cooperative Ltd should submit reports to the court. The RBI can consider the representations given by the depositors while reviewing its decision by July 9," the bench said.

On the progress of the investigation, the state government told the court the fraud case at the bank has been transferred to the CID. Its counsel said efforts have been made to identify an agency to conduct forensic auditing. Observing that parallel investigations by both the CID and the ACB, the bench directed the government to decide within a week in clubbing the case.

The bench directed the Enforcement Directorate to file a report in a week on the steps taken based on the Enforcement Case Information Report registered in February.