PMC crisis: RBI raises withdrawal cap to Rs 10,000 in 6 months

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Published: September 26, 2019 9:42:35 PM

The RBI had Tuesday imposed a slew of restrictions on PMC Bank after finding many irregularities in its books, including massive under-reporting of NPAs. The lender is not allowed to offer new loans or accept deposits.

PMC crisis, RBI, withdrawal cap, Punjab & Maharashtra Cooperative Bank, Reserve Bank India, industry newsThe monetary authority said the relaxation has been granted with a view to reduce the hardships of depositors. (Image: Reuters)

In a major relief to the hapless customers of crippled Punjab & Maharashtra Cooperative Bank, the Reserve Bank on Thursday increased cash withdrawal limit to Rs 10,000 per account-holder from Rs 1,000 set earlier over the next six months. The regulator also said the relaxation in withdrawals will take care of over 60 percent of the customers of the cooperative bank focused on low-income customers.

The RBI had Tuesday imposed a slew of restrictions on PMC Bank after finding many irregularities in its books, including massive under-reporting of NPAs. The lender is not allowed to offer new loans or accept deposits.

“It has been decided to allow the depositors to withdraw a sum not exceeding Rs 10,000 (including Rs 1,000 already withdrawn) of the total balance held in every savings bank account or current account or any other deposit account,” the RBI said.

The monetary authority said the relaxation has been granted with a view to reduce the hardships of depositors. A customer can either withdraw Rs 10,000 in one go or can do it over a period of six months, the Reserve Bank said. The RBI further said, the higher limit is subject to customer not having any liabilities with the bank by way of loans or surety for third-party loans or any other liens.

“With the relaxation, more than 60 percent of the depositors of the bank will be able to withdraw their entire account balance,” the central bank said.

The limit was reviewed on the basis of a preliminary assessment of the bank’s latest deposits and liquidity profile which was furnished by the administrator, it said. RBI said other terms and conditions of the earlier issued directive remain unchanged. The regulatory action on the bank was imposed on account of major financial irregularities, failure of internal control and systems of the bank and wrong/under-reporting of its exposures under various off-site surveillance reports to RBI that came to the it’s notice recently.

The BRI superseded the board of the bank and placed it under an administrator JB Bhoria, a general manager with the central bank. RBI further said it is closely monitoring the position and shall continue to take further steps as are necessary to safeguard the interest of the depositors of the bank.

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