Published On : Sun, Jul 12th, 2015

Is Navodaya bank under crisis as RBI allows bank to bar premature withdrawals

Nagpur: According to news published today in a local newspaper, City-based urban cooperative Navodaya Bank on Saturday witnessed a run by depositors amid rumours that the bank was facing a crisis with losses in the range of Rs35 crore. Depositors rushed to the bank seeking premature withdrawals, forcing the bank to seek the intervention of the Reserve Bank of India.

Congress leader and former MLA Ashok Dhawad who heads the bank denied that the bank was in financial trouble. “Rumours were spread about financial health of the bank by some people. After this, mainly cooperative societies and large organizations queued up seeking premature withdrawals. To prevent a panic situation, we alerted the RBI which issued a letter allowing us to bar premature withdrawals. This is temporary measure to avoid further run on the bank. All routine operations of savings bank, current account and liquidating deposits on maturity are on as usual,” said Dhawad.

“It is impossible for any bank to honour demands of unexpected premature withdrawals. Societies and other institutions have large deposits running into crores,” explained Dhawad.

He said the bank was doing well and there was nothing to worry and for the account holders. The RBI intervention is a positive development enabling us to stop the premature withdrawals. According to sources, the bank currently has deposits totaling Rs138 cr.

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