Consider releasing deposits of Amanath customers: HC to RBI

The High Court on Tuesday asked the Reserve Bank of India (RBI) to consider a plea by depositors of Amanath Co-operative Bank for release of their money citing emergency.

Hearing a petition by senior Congress leader C K Jaffer Sharief and others against the merger of Amanath Bank with Canara Bank as directed by the High Court earlier, Justice Abdul Nazeer asked the RBI to consider the plea of members who have sought to withdraw their deposits citing emergencies such as ill health.

Amanath Bank, which filed an affidavit on its existing status, submitted that it had recovered about Rs 13 crore from borrowers in the last two months. The bank said it had begun the merger of its branches and had already merged the BVK Iyengar Road branch with the NR Road branch. The merger of three more branches is pending and will be taken up soon, it added.

The merger of branches was taken up following the court’s observation that having many several branches was nothing but wasteful expenditure in terms of salary and overheads. The court suggested that the bank close down at least half of its 11 branches, noting that it has about 300 employees whose monthly salaries run into Rs 85 lakh.

The counsel for the bank informed the court that depositors with liabilities had agreed to adjust the same with their deposits if the bank was permitted to do so. The bank submitted that one-time settlement for some borrowers—by waiving certain interest—is also pending before the registrar of co-operative societies for consideration.

Justice Abdul Nazeer adjourned the matter with a direction to the RBI to report the liquidity position of the bank after considering its report of recovery so that a decision could be taken about frozen accounts.

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