RBI curbs on Bengaluru private bank from doing business

Bengaluru: The Reserve Bank of India (RBI) has curbed a Bengaluru-based private bank from doing business with immediate effect for alleged irregularities in transactions, an official said on Saturday.

“Sri Guru Raghavendra Sahakara Bank in Bengaluru shall not, without prior approval of the RBI in writing, grant or renew loans and advances, make investment, borrow funds or accept fresh deposits from January 10, 2020,” the RBI said in a directive, which has been accessed by IANS.

The central bank’s Chief General Manager Yogesh Dayal issued the directive under Sections 35A and 56 of the Banking Regulation Act, 1949, from Mumbai.

The RBI, however, allowed the bank’s savings and current account customers and depositors to withdraw cash up to Rs 35,000 only till further notice.

“The private bank will also not disburse payment whether in discharge of its liabilities and obligations or otherwise, enter into compromise or arrangement and sell, transfer or otherwise dispose its properties or assets except, as instructed on January 2, 2020,” said the directive.

“The bank will, however, continue to undertake business with restrictions till its financial position improves,” said an official, citing the directive.

The regulator clarified that its directive should not be construed as cancellation of the bank’s license issued by it.

“The directive shall remain in force for six months from January 10 and is subject to review,” added the official.