Royal Bank to repay matured FDs

The Royal Co-operative Bank Ltd, which was suspended from the clearing house operations on October 6, will start repaying fixed deposit holders (FD holders) first.

But the decision came as shock to general depositors, who had banked on the statements made by the officials of the bank that the Co-operative Bank will start its normal functions from Monday.

Depositors and account holders had gathered at the bank from early morning. But they were hugely disappointed when it was told that only fixed deposit holders would be repaid first.

"We have started repaying the FD holders from today. We will be paying around Rs 15 lakh during the day. Once we are done with the FD holders, we will start repaying the current and savings account holders," Parul Shah, managing director, Royal Bank told Business Standard.

"Those depositors, whose deposits exceed Rs 1 lakh, will be given priority in repayment. This is because the deposits below Rs 1 lakh are already insured by the Deposit Credit Insurance Guarantee Corporation (DCIGC)," she said.

"Though there is little possibility of the bank closing down, we do not want to take any risk. In case, the bank has to be closed down, we want to ensure that deposits of all the depositors and account holders, are insured," she added. Shah also claimed that the bank was stable and the depositors should not worry about their deposits.

"We have to recover more money than we have to pay. This is the reason why the RBI has not placed any restrictions on us so far. We are facing this crisis only because of withdrawals to the tune of Rs 4.50 crore from the bank in September, which was mainly triggered by panic due to problems in the Century Co-operative Bank Ltd," she added.

Jitu Modi, chairman of the bank, said, "We had a meeting with daily savings agents on Sunday. We have to pay Rs 4.69 crore to those daily savings customers, whose amounts have already matured, and those whose amounts will mature on September 30, next year. We are not in a position to repay the money in this period, so we have offered to pay the money in 24 installments (of Rs 19 lakh each) instead of 12 installments."