Guru Raghavendra Sahakara Bank scam: 5 years on, victims demand deposit insurance hike from Rs 5-lakh limit

Indian Express

18 hours ago

According to the bank data accessed by The Indian Express, 31,376 individuals had invested up to Rs 5 lakh, totaling Rs 84.57 crore, and 5,853 individual accounts had more than Rs 5 lakh, totalling up to Rs 1,350 crore.Written by Bhoomika Roy Banerjee and Mehak Singh
Five-and-a-half years after the Reserve Bank of India imposed a moratorium on Sri Guru Raghavendra Sahakara Bank Niyamita (SGRSBN) in Basavanagudi, the affected depositors have intensified their demand for enhanced deposit insurance coverage. The victims, in a meeting held on Friday, have sought an increase from the current Rs 5-lakh limit imposed by the RBI under the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Harish V, joint secretary of the United Forum of Depositors — a group of SGRSBN depositors who are fighting to get back their money — stated that the government is doing little for their returns.
In 2023, the Karnataka government ordered a Central Bureau of Investigation probe to look into the case where Rs 2,500 crore was allegedly misappropriated by the bank management. So far, the Enforcement Directorate (ED) has attached assets worth Rs 159 crore as part of its probe into the alleged scam.
However, Harish said, 'A Right To Information (RTI) query revealed that CBI had never taken the case to investigate. Thousands of them (depositors) are still in trouble and are unable to lead their lives.'
He pointed out that even after five years there has been no attempt to recover the money by the defaulters or even by those from the management that led to the collapse of the bank. The administrators appointed by the government have changed but nothing has yielded any results, he added.
According to the bank data accessed by The Indian Express, 31,376 individuals had invested up to Rs 5 lakh, totaling Rs 84.57 crore, and 5,853 individual accounts had more than Rs 5 lakh, totalling up to Rs 1,350 crore.
Out of the 45,000 depositors, most of them got the Rs 5 lakh insurance amount from Deposit Insurance and Credit Guarantee Corporation (DICGC). However, over 15,000 depositors who have deposited more than Rs 6 lakh are yet to get the complete relief amount.
G K Gururaj, another joint secretary, said that the current DICGC insurance limit of ₹5 lakh provides inadequate protection for depositors who have lost their savings, running into lakhs and crores of rupees.
'A forensic report submitted to RBI has been passed to the administration for assessment. Preliminary estimates suggest losses of ₹1,944 crore, though depositors have expressed willingness to forgo nearly Rs 650 crore in accumulated interest if their principal amounts can be recovered,' he added.
More than 60 of the depositors, mainly elderly citizens, have died after the bank fell into controversy, according to the forum.
Among the depositors who attended the meeting was 76-year-old Usha Devi, a retired BBMP employee. Her husband died six months ago.
Vasudev, an active member of the forum and a depositor, shared how his brother was recently denied hospital admission due to lack of funds. He also talks about the plight of elderly depositors whose basic medical necessities aren't met. He said, 'This is a humanitarian issue here; it's more than the money. Most of us are frustrated.'
The RBI imposed withdrawal restrictions on SGRSBN in January 2020.
(Bhoomika Roy Banerjee and Mehak Singh Interns with The Indian Express)