Co-op bank promises to take legal action against defaulters
Sri Guru Raghavendra Sahakara Bank, on which the Reserve Bank of India (RBI) had imposed operational restrictions, on Thursday said it was confident of recovering ₹50 crore from defaulters in cash and through liquidation of collateral in the next few days.
The bank’s chief adviser Vasudeva Maiya told The Hindu, “The bank today met defaulters at a borrowers’ meet and we have asked them to pay up the money at the earliest, failing which each of these people will have to face legal action. We are confident of recovering the entire credit outstanding by March 31 this year.”
On January 10, the banking regulator had barred the bank from accepting new deposits, disbursing fresh loans or making any investments without its approval.
The RBI had also fixed the withdrawal limit at ₹35,000, spreading panic among its customers. “On Thursday, 35 defaulters, of a total of 62, attended the meeting and we will meet the rest of the borrowers on Friday. We are trying our best to resolve the issue and assure that all our customers will get their money back,” said Mr. Maiya.
Mr. Maiya added that the bank has NPAs (non-performing assets) to the tune of ₹300 crore and ₹75 crore in outstanding interest. It had collateral securities worth about ₹2,200 crore against its total loan payout of ₹1,700 crore, he said.
“The RBI has asked us to initiate legal action against borrowers refusing to pay up. We have decided to go aggressive on liquidation of collateral to recover the money,” he added.
Ramesh Babu, a director at the Karnataka State Urban Co-Op Bank Federation, said, there were 264 co-op banks as members of the federation. “However, the body has only advisory powers on its members. Co-op banks are under dual controls by the RBI and Registrar of Co-Op Societies.’’
Meanwhile, with growing concern for their savings, thousands of depositors have been flocking to the bank’s eight branches in the city since last many days. Navya, a 23-year-old, whose parents and sister are customers of the bank, said: “Sri Guru Raghavendra Sahakara Bank Niyamitha has been our family bank over the last couple of decades. But all of a sudden,we are not able to withdraw any money other than the RBI set ₹35,000. I am getting married on January 30. Forget money for jewellery and clothes, I’ve no money even to pay for my marriage hall. My parents have been saving from the year I was born. My family is so upset and embarrassed.’’
“We never know what happens. Usually, the initial glimpse of any big scam is too small or negligible. My father has over ₹25 lakh, all his retirement money, deposited in this bank. One can’t easily forget the recent big ticket scandal involving Punjab and Maharashtra Co-operative Bank,’’ said Narayan Rao, a resident of Basavanagudi.
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