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Kerala man dies after co-op bank delays deposit of Rs 5 lakh: Key details

Somasagaram had been trying to withdraw his deposit for the last six months, but the officials repeatedly declined his requests

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Surbhi Gloria Singh New Delhi

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A 52-year-old Neyyattinkara resident died by suicide on Thursday after Perumpazhuthoor Service Co-operative Bank allegedly delayed the release of his deposits. He had saved this money for his daughter’s wedding and to renovate his home. Somasagaram Y ingested pesticide on 19 April and was receiving treatment at Thiruvananthapuram Medical College Hospital. The Marayamuttom police have registered his death as unnatural.

Somasagaram had deposited Rs 6 lakh in the co-operative bank, which he had saved through plantain cultivation and masonry work. According to PTI, his father stated that Somasagaram had been trying to withdraw his deposit for the last six months, but the officials repeatedly declined his requests.
 

“The bank administration killed my son. He saved every single rupee earned from agriculture and masonry work for his daughter’s marriage. He also wanted to renovate the house because the roof could collapse at any moment. He visited the bank multiple times on the dates they had provided, but they refused to dispense the cash and kept sending him back with different excuses,” said Yesudas.

Bank’s version

The bank officials claimed they had released about Rs 1 lakh in increments on various occasions and that they were unaware of the urgency. “He always spoke calmly, so we didn't realise the urgency. We release funds based on the urgency of the depositors. Somasagaram told us he needed cash to renovate his house, but we didn't know he was on the verge of suicide,” said the acting bank secretary, Jaya Kumari.

What is co-operative banking and how does it function?

Co-operative banking refers to a small financial institution established by a group of individuals to meet the capital needs of their specific community. These institutions are owned and controlled by their members, and board members are democratically selected to oversee operations.

Co-operative banks operate on the principle of cooperation. To support the financial needs of a village or a specific community, people pool resources to provide banking services, such as loans and savings accounts.

How does a co-operative bank work?

Membership — Individuals or businesses who meet specific eligibility criteria can become members by purchasing shares or making an initial deposit.  

Democratic governance — Every member has equal voting rights, regardless of the number of shares they hold. Members elect a board of directors among themselves to oversee the bank’s operations and make key decisions.

Capital formation — Members contribute to the bank’s capital by purchasing shares or making deposits. These funds serve as the primary source of capital for the bank’s lending activities and other financial services.

Customer rights

According to Adhil Shetty, CEO of Bankbazaar.com, "Customers typically have the right to deposit and withdraw their funds as per bank regulations and account type. There shouldn't be unreasonable restrictions on withdrawal amounts, though some limitations might exist, especially for large sums".

"When it comes to such issues where funds are not released, customers have the right to seek redressal for grievances and complaints through the bank's grievance redressal mechanism. If unsatisfied, they can escalate the issue to banking ombudsmen or consumer forums or escalate to higher authorities," he explained.

Who oversees these banks?

In India, co-operative banks are registered under the States Co-operative Societies Act. They also fall under the regulatory ambit of the Reserve Bank of India (RBI) under the Banking Regulations Act, 1949, and the Banking Laws (Co-operative Societies) Act, 1955.

They were brought under the RBI's oversight in 1966.

With agency inputs

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First Published: May 03 2024 | 11:01 AM IST

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