Sunday, August 7, 2011

RBI puts hold on all clearing operations of Veerashaiva Co-op Bank In Mumbai

Thousands rush to Veerashaiva Co-op Bank’s Andheri (E) branch in a bid to save their life’s earnings
A notification from the Reserve Bank of India late on Wednesday evening to stop all the business transactions with immediate effect creating panic among depositors of the Veerashaiva Co-operative Bank. According to a senior officer at the bank, who did not wish to be named, the RBI has put all clearing operations on hold for the Co-operative bank, and has issued this notification following the high percentage of Non-performing Assets (NPA) of the bank.  

Usha Joshi (56) Andheri (E) resident could not hold back her tears when she found out that all her money deposited in her bank account has been frozen. Usha is one of the thousands of account holders of which received “I urgently need the money to pay the builder, since I am buying a home. I do not know what will happen. The bank officials have asked us to come back on Friday for further information, I have been banking with this bank for the last 30 years, and never has such a thing happened in the past,” said Joshi.   

The RBI has given a moratorium of 180 days or 6months for recovery according to the RBI provisioning norms or guidelines for Urban Co-operative Banks (UCBs) the officer said.

According to senior official at the bank, the bank has 45% NPA on their loan book.

 The Mumbai headquartered Veerashaiva Co-operative Bank which has 15,000 share holders and  has 6 branches in Mumbai including Kandivali (E), Panvel ,Chembur ,Vashi Thane and Andheri. The bank currently has more than 2 lakhs account holders out of which 25,000 account holders belong to Andheri (E) branch.

The Andheri branch gave out Rs 1,000 to the account holders and asked them to come again

The following day.

When the ADC contacted managers of the other branches , they confirmed the notification by RBI, however they mentioned that the account holders are thronging only  the Andheri branch ,the rest of the branches did witness such an incident.

A senior official at the Chembur branch said that they have put up the board at all the branches notifying the depositors.  “There is nothing to worry for the depositors as there money is safe and bank is going to look in to the matter and trying to sort out the issue in a few days,” the official said.  

An attempt to contact the RBI for details of the notice served on the bank was unsuccessful at the time of going to press. Source:

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